You have just taken a job as the accountant for a stucco repair firm whose accounting year ends on December 31.
As part of the management team, you receive a yearend bonus directly related to the firm's earnings for the year. One of your duties is to review the journal entries recorded by the bookkeepers. A new bookkeeper prepared the following journal entry: To record deposit from client.
You notice that the explanation for the journal entry refers to the amount as a deposit, and the bookkeeper explains to you that the firm plans to provide the services to the client in March of the following year.
Required
1. Did the bookkeeper prepare the correct journal entry to account for the client's deposit? Explain your answer.
2. What is your responsibility in this situation as the new accountant for the firm? Explain your answer.

Question

You have just taken a job as the accountant for a stucco repair firm whose accounting year ends on December 31.
As part of the management team, you receive a year­end bonus directly related to the firm's earnings for the year. One of your duties is to review the journal entries recorded by the bookkeepers. A new bookkeeper prepared the following journal entry:  To record deposit from client.
You notice that the explanation for the journal entry refers to the amount as a deposit, and the bookkeeper explains to you that the firm plans to provide the services to the client in March of the following year.
Required
1. Did the bookkeeper prepare the correct journal entry to account for the client's deposit? Explain your answer.
2. What is your responsibility in this situation as the new accountant for the firm? Explain your answer.

Quizplus · Accepted Answer

The Answer of You have just taken a job as the accountant for a stucco repair firm whose accounting year ends on December 31.
As part of the management team, you receive a year­end bonus directly related to the firm's earnings for the year. One of your duties is to review the journal entries recorded by the bookkeepers. A new bookkeeper prepared the following journal entry:  To record deposit from client.
You notice that the explanation for the journal entry refers to the amount as a deposit, and the bookkeeper explains to you that the firm plans to provide the services to the client in March of the following year.
Required
1. Did the bookkeeper prepare the correct journal entry to account for the client's deposit? Explain your answer.
2. What is your responsibility in this situation as the new accountant for the firm? Explain your answer.

You Have Just Taken a Job as the Accountant for a Stucco