| Posted: 22 Apr 2009 at 14:52 | IP Logged
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Kemp Co. must determine the December 31, 1990, year-end accruals for advertising and rent expenses. A $500 advertising bill was received January 7, 1991, comprising costs of $375 for advertisements in December 1990 issues, and $125 for advertisements in January 1991 issues of the newspaper.
A store lease, effective December 16, 1989, calls for fixed rent of $1,200 per month, payable one month from the effective date and monthly thereafter. In addition, rent equal to 5% of net sales over $300,000 per calendar year is payable on January 31 of the following year. Net sales for 1990 were $550,000.
In its December 31, 1990, balance sheet, Kemp should report accrued liabilities of:
Choice "d" is correct. $13,475 accrued liabilities at 12/31/90.
Accrued
Liabilities
12/31/90
Advertising for December 1990 issues 375
($125 for Jan 1991 issues pertain to 1991)
Store lease fixed rent ($1,200 „e 1/2 month) 600
Actual net sales $550,000
Less base sales (300,000)
Excess 250,000
Percentage „e 5%
Percentage rent 12,500
Total $13,475
i am not getting the monthy rent part, why is it 1/2 of 1200. it should be full 1990 as the lease started in 1989??
__________________
jams
BEC-76
AUD-80
REG-84
FAR-81 !!!
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Topic: Accured expenses
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