Atlantic Company Is Completing the Information Processing Cycle at the End

question 85

Essay

Atlantic Company is completing the information processing cycle at the end of the annual accounting period, December 31, 20X1. Four adjusting entries must be made at this date to update the accounts. The following accounts, selected from Atlantic's chart of accounts, are to be used for this purpose. They are coded to the left for easy reference. $$\begin{array} { | l | l | } \hline \text { A. Office Supplies } & \text { D. Office Supplies Expense } \\\hline \text { B. Trade Receivables } & \text { K. Rent Expense } \\\hline \text { C. Accumulated Depreciation } & \text { L. Bad Debt Expense } \\\hline \text { D. Interest Receivable } & \text { M. Depreciation Expense } \\\hline \text { E. Notes Payable } & \text { N. Interest Expense } \\\hline \text { F. Interest Payable } & \text { O. Sales Revenue } \\\hline \text { G. Property Tax Payable } & \text { P. Rent Revenue } \\\hline \text { H. Unearned Rent } & \text { Q. Interest Revenue } \\\hline \text { I. Rent Payable } & \text { R. Equipment } \\\hline\end{array}$$ You are to indicate the appropriate account code and amount for each required adjusting entry at December 31, 20X1

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Definitions:

Plant Size

The physical capacity or output potential of a manufacturing or production facility.

Implicit Cost

The opportunity cost of using resources already owned by the firm for its current purpose, rather than their next best alternative use.

Economic Profits

The surplus remaining after total costs (both explicit and implicit) are subtracted from total revenues, often indicating the financial health and efficiency of a company.

Long-Run Average Cost

The average cost per unit of output where all inputs, including capital, are variable over time, reflecting economies or diseconomies of scale.