Lucid Solutions Inc

question 101

Essay

Lucid Solutions Inc. has the following selected account balances from its unadjusted trial balance as of December 31, 2018, the company's year-end:
• Prepaid Insurance: $75,000
• Prepaid Rent: $50,000
• Buildings: $3,600,000
• Wages Payable: $420,000
• Note Payable: $360,000
• Wage Expense: $1,120,000
• Insurance Expense: $120,000
• Interest Expense: $234,000
• Rent Expense: $260,000
At year-end, Lucid makes the necessary adjusting journal entries to properly record revenues and expenses for the year. The following information applies to the adjusting journal entries:
a.
The prepaid insurance balance relates to a two-year insurance policy purchased on June 1 that covers the period of 7/1/18-6/30/20.
b. The prepaid rent balance relates to rent that was paid in January 2018 to cover the company's facilities for the year 2018.
c. Wages for the last week of 2018 amount to $33,000 and will be paid after year-end and have not yet been recorded.
d. Lucid purchased the buildings on January 1, 2018 and depreciates them on a yearly basis. It must record a full year of depreciation at the end of 2018. The buildings have no residual value, a 30-year estimated useful life, and will be depreciated on a straight-line basis.
e. Lucid has not yet recorded accrued interest expense for 2018 on the note payable in the amount of $16,000. It will not be paid until 2019.

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Definitions:

Placebo Group

In drug research, a group given an inert substance to assess the psychological effect of receiving a treatment.

Experimenter Expectancy Effect

The influence that the researcher's expectations can have on the outcome of a study, potentially biasing the results.

Floor Effect

Failure of a measure to detect a difference because it was too difficult.

Paper-and-pencil Questionnaire

A traditional survey method where participants respond to questions written on paper by physically marking their answers.