A Corporation Operates a Retail Store and Must Determine the Correct

question 126

Multiple Choice

A corporation operates a retail store and must determine the correct December 31, year 1, year-end accrual for the following expenses: 1. The store lease calls for fixed rent of $1,000 per month, payable at the beginning of the month, and additional rent equal to 6 percent of net sales over $200,000 per calendar year, payable on January 31 of the following year. Net sales for year 1 are $800,000.
2) The corporation has personal property subject to a city property tax. The city's fiscal year runs from July 1 to June 30 and the tax, assessed at 3 percent of personal property on hand at April 30, is payable on June 30. The corporation estimates that its personal property tax will amount to $6,000 for the city's fiscal year ending June 30, year 2.
In its December 31, year 1, balance sheet, the corporation should report accrued expenses of:

• A) $39,000
• B) $39,600
• C) $51,000
• D) $51,600

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