Selected Data from BR Co

question 96

Essay

Selected data from BR Co.'s accounting system are provided below.All balances are before year-end adjustments and all data relate to the year ended December 31,2011.Determine the amount that will be reported for each of the items in the table below,after the appropriate adjustments have been made using the following information below.The table does NOT include all of the accounts that will be adjusted.
a.A note payable of $10,000 has been unpaid all year and bears interest at 8%.
b.Equipment with a cost of $20,000,a 5-year estimated useful life,and a $5,000 estimated residual value was owned and used all year.
c.$50 of the supplies are unused at the end of the period.
d.The Prepaid rent balance relates to a $1,500,12-month lease beginning on October 1,2011.
e.$15,000 rent revenue has been earned but not yet collected from tenants.
f.Employees have earned an additional $25,000 in salaries,but have not yet been paid.

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Definitions:

Fixed Costs

Costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.

Margin Of Safety

The difference between actual or expected sales and the break-even point, indicating the level of risk in failing to cover fixed costs.

Breakeven

The point at which total costs and total revenue are equal, resulting in no net loss or gain.

Sales

The exchange of a commodity or service for money; the action of selling something.