Duluth Co. collected a $6,000 cash advance from a customer on November 1, 2016 for work to be performed over a six-month period beginning on that date. If the year-end adjustment is properly recorded, what will be the effect of the adjusting entry on Duluth's 2016 financial statements?a. Increase assests and decrease liabilitiesb. Increase assests and increase revenuesc. Decrease liabilities and increase revenuesd. No effect
Solved
Show answers
More tips
- G Goods and services Kogda zhdatt Iphone 5? The Latest News and Rumors...
- F Family and Home Parquet or laminate, which is better?...
- L Leisure and Entertainment How to Properly Wind Fishing Line onto a Reel?...
- L Leisure and Entertainment How to Make a Paper Boat in Simple Steps...
- T Travel and tourism Maldives Adventures: What is the Best Season to Visit the Luxurious Beaches?...
- H Health and Medicine Kinesiology: What is it and How Does it Work?...
- O Other How to Choose the Best Answer to Your Question on The Grand Question ?...
- L Leisure and Entertainment History of International Women s Day: When Did the Celebration of March 8th Begin?...
- S Style and Beauty Intimate Haircut: The Reasons, Popularity, and Risks...
- A Art and Culture When Will Eurovision 2011 Take Place?...
Answers on questions: Business
- M Mathematics Only 15% of all days in Central Texas are rainy. Moreover, you know the track record of the weather app on your phone: when it rains, your app gives the correct forecast...
- C Computers and Technology Write a program that reads text from a file. For each word read, output the original word and its Pig-Latin equivalent in all-caps, in a tabular format. You can read...
- M Mathematics A population of bacteria is initially 500. After two hours the population is 250....
Ответ:
c. Decrease liabilities and increase revenues.
Explanation:
Duluth Co. collected a $6,000 cash advance from a customer on November 1, 2016 for work to be performed over a six-month period beginning on that date.
If the year-end adjustment is properly recorded, the effect of the adjusting entry on Duluth's 2016 financial statements will be a decrease in liabilities and increase in revenues.
This will be the case because when Duluth Co. collected a $6,000 cash advance from a customer on November 1, it would have passed the following entries:
Dr Cash$6000
Cr Prepaid Revenue...$6000
But note that 'prepaid revenue' is a liability which is why it has a credit balance.
By year end, the adjustment will be to take credit to revenue for 2 months that has elapsed for November and December, which is 2/6 x $6000.
Hence the entry will be:
Dr. Prepaid Revenue$2000
Cr. Revenue$2000
which implies that the liability of prepaid revenue has reduced and revenue has increased
Ответ:
they are set by organisations to managers