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Limelight Company records these journal entries: Prepaid insurance expired $53 Accrued rent expense $28 Salaries previously...

Limelight Company records these journal entries:

Prepaid insurance expired

$53

Accrued rent expense

$28

Salaries previously accrued are paid

$27
Common stock is issued for cash

$35

Required for Section 2:

Indicate the net effect of these journal entries (i.e., combined effect of all four journal entries) on the following items. Indicate the dollar amount of the net effect and the direction of the net effect. (Example: $13 Increase, or $8 Decrease, or No Effect.) Hint: Prepare the journal entries.

  1. Net Income
  2. Total Assets
  3. Total Liabilities
  4. Retained Earnings
  5. Total Equity
  6. Working Capital

Please can you solve this, you solved this once but I am no sure.

Solutions

Expert Solution

Limelight Company
Journal entries Impact
No. Account Debit Credit Net Income Total Assets Total Liabilities Retained Earnings Total Equity Working Capital
1 Insurance expense       53 (53)     (53) (53) (53)
Prepaid Insurance        53 (53)
2 Rent expense       28 (28)     (28) (28) (28)
Rent Payable        28     28
3 Salaries Payable       27      -   (27)      -  
Cash        27 (27)
4 Cash       35      -       35     35
Common Stock        35     35
Totals (81) Decrease (45) Decrease        1 Increase     (81) Decrease (46) Decrease (46) Decrease

ekkarill92 answered 1 year ago
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