Sandpiper Corporation paid $120,000 for annual property taxes on January 15,2014,and $20,000 for building repair costs on March 10,2014.Total repair expenses for the year were estimated to be $200,000,and are normally accrued during the year until incurred.What is the total amount of property tax and repair expense to be reported in Sandpiper's first quarter 2014 interim income statement?
A)$ 50,000
B)$ 80,000
C)$100,000
D)$140,000

Question

Quizplus · Accepted Answer

The property tax for the first quarter is $30,000 ($120,000 annual tax / 4 quarters). The repair expense incurred in the first quarter is $20,000. Therefore, the total expense for the first quarter is $50,000 (property tax) + $20,000 (repair expense) = $70,000. However, the estimated repair expenses are accrued evenly, so $200,000 / 4 = $50,000 for the first quarter. Thus, the total is $30,000 (property tax) + $50,000 (accrued repair expense) = $80,000.

Sandpiper Corporation Paid $120,000 for Annual Property Taxes on January