Answer to Question #216119 in Accounting for zuby

Question

Ramond Company has hired you to prepare financial statements for the year ending 12/31. On your first day of work, your assistant comes to you with several items that could be classified as expenses or could be classified as assets. Based on your knowledge of accounting so far, determine whether the following items should be recorded as an expense or an asset.

1.

On 12/31, Ramond paid $14,000 to rent office space for the next twelve months.

2.

On 10/1, Ramond paid $40,000 for insurance that covered the company’s property for the last quarter of the year.

3.

On 6/1, Ramond purchased $27,000 in supplies, all of which were used by 12/31.

4.

On 12/31, Ramond purchased $5,000 worth of supplies for the coming month.

Answer 1

Determine whether the following items should be recorded as an expense or an asset.

Answer provided in the table below.