Pierce Company Was Founded in Year 1 and Engaged in the Following

question 45

Essay

Pierce Company was founded in Year 1 and engaged in the following transactions:Issued common stock for cashPaid rent in advance for three months at a timePurchased supplies on accountCollected cash from a customer for services to be provided over a period of one yearPaid a cash dividend to stockholdersPurchased a two-year fire insurance policyProvided services to customers on accountCollected cash from customers in partial settlement of accounts receivablePaid cash for various operating expensesRequired:a)Identify the transactions from the list above that will require adjusting entries at year end.b)Explain why adjusting entries are required before financial statements can be prepared.

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Definitions:

Fraud

A deliberate deception to secure unfair or unlawful gain.

Express Corporate Powers

The specific authorities granted to a corporation through its charter and state law, allowing it to perform certain actions.

Corporate Veil

A legal concept that separates the identity and responsibilities of a corporation from those of its shareholders, protecting them from personal liability in most cases.

Promoter

An individual or company responsible for organizing and starting a business or enterprise, often involved in its early financing and establishment.