A corporation operates a retail store and must determine the correct December 31, year 1, year-end accrual for the following expenses: 1. The store lease calls for fixed rent of $1,000 per month, payable at the beginning of the month, and additional rent equal to 6 percent of net sales over $200,000 per calendar year, payable on January 31 of the following year. Net sales for year 1 are $800,000.
2) The corporation has personal property subject to a city property tax. The city's fiscal year runs from July 1 to June 30 and the tax, assessed at 3 percent of personal property on hand at April 30, is payable on June 30. The corporation estimates that its personal property tax will amount to $6,000 for the city's fiscal year ending June 30, year 2.
In its December 31, year 1, balance sheet, the corporation should report accrued expenses of:
A) $39,000
B) $39,600
C) $51,000
D) $51,600

Question

Quizplus · Accepted Answer

The correct answer is A because the accrued expenses for the lease and property tax are $39,000.

A Corporation Operates a Retail Store and Must Determine the Correct