Question
In: Accounting
Zena Company’s financial records showed the following selected items for 2015: Advertising receipts $650,000 Land rental...
Zena Company’s financial records showed the following selected items for 2015:
Advertising receipts
$650,000
Land rental revenues
$520,000
Interest paid on borrowings
$100,000
Wage expense
$190,000
Zena follows the accrual basis of accounting. The following balances were taken from Zena’s balance sheets:
12-31-14
12-31-15
Advertising receivables
20,000
25,000
Prepaid advertising costs
50,000
44,000
Unearned land rental revenue
46,000
53,000
Unearned advertising
30,000
38,000
Wages payable
34,000
25,000
Interest payable
60,000
70,000
a.
What were advertising-related revenues for 2015?
b.
What was interest expense for 2015?
c.
How much cash was paid out for wages and salaries during 2015?
d.
How much cash was collected for land rentals during 2015?
Solutions
Expert Solution
Answer to Part a.
Advertising Revenue = Advertising Receipts + Increase in Advertising Receivables - Increase in Unearned Advertising
Increase in Advertising Receivables =$25,000 -$20,000 = $5,000
Increase in Unearned Advertising = $38,000 - $30,000 = $8,000
Advertising Revenue for 2015 = $650,000 + $5,000 - $8,000
Advertising Revenue for 2015 = $647,000
Answer to Part b.
Interest Expense = Interest Paid + Increase in Interest Payable
Increase in Interest Payable = $70,000 - $60,000 = $10,000
Interest Expense for 2015 = $100,000 + $10,000
Interest Expense for 2015 = $110,000
Answer to Part c.
Wages and Salaries Paid = Wage Expense + Decrease in Wages Payable
Decrease in Wages Payable = $34,000 - $25,000 = $9,000
Wages and Salaries Paid in 2015 = $190,000 + $9,000
Wages and Salaries paid in 2015 = $199,000
Answer to Part d.
Cash collection from Land Rental = Land Rental Revenue + Increase in Unearned Land Rental Revenue
Increase in Unearned Land Rental Revenue = $53,000 - $46,000 = $7,000
Cash collection from Land Rental = $520,000 + $7,000
Cash collection from Land Rental = $527,000
ekkarill92 answered 11 months agoRelated Solutions
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