Designer Architects had the following additional information at its November 30, 2023, year-end:a. The Unearned Revenue account showed a balance of $62,000, which represented four months of services paid in advance by a client for services beginning on October 15,
Designer Architects had the following additional information at its November 30, 2023, year-end:a. The Unearned Revenue account showed a balance of $62,000, which represented four months of services paid in advance by a client for services beginning on October 15, 2023.
b. Page 802The payroll register showed the following unpaid amounts as at November 30:
*These values are based on assumed payroll deductions. **The employer’s portions of EI and CPP are 1.4 times and 1 times the employees’ portion, respectively.c. The November utility bill in the amount of $2,160 was unpaid and unrecorded at November 30.
RequiredPrepare the appropriate entries at year-end based on the above information.
Analysis Component:If the above entries are not recorded on November 30, 2023, what is the effect on the income statement and the balance sheet? Identify which GAAP would be violated.
EI* Premium Income Taxes* CPP* Total Deductions Net Payable Office Salaries Sales Salaries 80.41** 1,290.00 183.98** 1,554.39 2,745.61 2,500.00 1,800.00
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- Tutor Answer
Analysis component The income statement would be understated by 16 493 45 calculated as 23 250 2 5…View the full answer
Unearned revenue is money received by an individual or company for a service or product that has yet to be provided or delivered. It can be thought of as a \"prepayment\" for goods or services that a person or company is expected to supply to the purchaser at a later date. As a result of this prepayment, the seller has a liability equal to the revenue earned until the good or service is delivered. This liability is noted under current liabilities, as it is expected to be settled within a year.
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