- On the first of April paid rent in advance for 12 months, $15,000.
- Received $4,000 Fees in Advance on 1st March 2018. At the 30th 25% of the work has been completed.
- Employee Salaries owed for Monday to Wednesday of a five-day working week; the weekly payroll is $12,500.
- Depreciation for one month on Office Equipment costing $5,000 with a salvage value of zero and a useful life of 10 years.
- Interest expense accrued $1,300.
Explain why accrual accounting provides more complete information than cash basis accounting.
Spanners Accounting Practice reported the following account balances (all these accounts have normal balances) at 30 November 2017:
|Sales and Marketing expense||$2,100||Cash||$1,100|
|Other assets||$700||Service Revenue||$5,500|
|Depreciation expense||$800||Accounts Payable||$500|
|Non-current liabilities||$600||Accounts Receivable||$900|
|Capital – Spanners||$3,500||Drawings -Spanners||$500|
Required: Journalise Spanner’s closing entries, as needed for these accounts.
Why are closing entries necessary?