Mune company recorded journal entries for the declaration of $50,000 of dividends, the $32,000 increase in accounts receivable for services rendered, and the purchase of equipment for $21,000. What net effect do these entries have on owners' eq
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Mune Company recorded journal entries for the payment of $50,000 of dividends, the $32,000 increase in accounts receivable for services rendered, and the purchase of equipment for $21,000. What net effect do these entries have on owners’ equity?
I believe the answer is 11,000 but I want to make sure.
Pappy Corporation received cash of $13,500 on September 1, 2007 for one year’s rent in advance and recorded the transaction with a credit to Unearned Rent. The December 31, 2007 adjusting entry is
debit Rent Revenue and credit Unearned Rent, $4,500.
Panda Corporation paid cash of $18,000 on June 1, 2007 for one year’s rent in advance and recorded the transaction with a debit to Prepaid Rent. The December 31, 2007 adjusting entry is
debit Prepaid Rent and credit Rent Expense, $10,500....Show more
Marc
9 years ago
Best Answer
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Mune Company recorded journal entries for the payment of $50,000 of dividends, the $32,000 increase in accounts receivable for services rendered, and the purchase of equipment for $21,000. What net effect do these entries have on owners’ equity?
I believe the answer is 11,000 but I want to make sure. - INCORRECT
The real answer is a reduction of $18,000 ($50,000 reduction coupled with a $32,000 increase.) The $21,000 purchase of equipment has no effect on owners equity.
Pappy Corporation received cash of $13,500 on September 1, 2007 for one year’s rent in advance and recorded the transaction with a credit to Unearned Rent. The December 31, 2007 adjusting entry is
debit Rent Revenue and credit Unearned Rent, $4,500. - INCORRECT
The correct answer is the exact opposite:
Debit Unearned Rent $4,500
Credit Rent Revenue $4,500
You need to reduce the liability (unearned rent) and you do that by debiting it, and credit the revenue account to record the income.
Panda Corporation paid cash of $18,000 on June 1, 2007 for one year’s rent in advance and recorded the transaction with a debit to Prepaid Rent. The December 31, 2007 adjusting entry is
debit Prepaid Rent and credit Rent Expense, $10,500. - INCORRECT
Again, the correct answer is the exact opposite:
Debit Rent Expense $10,500
Credit Prepaid Rent $10,500
Here, you need to reduce the asset (prepaid rent) and crediting it does that. The offsetting debit is to record 7 months of rent expense. You record that by debiting the rent expense account....Show more