Bed & Bath, a retailing company, has two departments: Hardware and Linens.
The company's most recent monthly contribution format income statement follows:

Total Hardware Linens
Sales $4,180,000 $3,100,000 $1,080,000
Variable expenses 1,308,000 891,000 417,000
Contribution margin 2,872,000 2,209,000 663,000
Fixed expenses 2,120,000 1,320,000 800,000
Net operating income (loss) $752,000 $889,000 $(137,000)

A study indicates that $375,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 12% decrease in the sales of the Hardware Department.

Required:
If the Linens Department is dropped, what will be the effect on the net operating income of the company as a whole?

The ledger of laurie rental agency on march 31 of the current year includes the following selected accounts before adjusting entries have been prepared. debit credit prepaid insurance $ 5,400 supplies $ 4,500 equipment 40,000 accumulated depreciation—equipment $12,600 notes payable 25,000 unearned rent revenue 11,100 rent revenue 90,000 interest expense –0– salaries and wages expense 20,000 an analysis of the accounts shows the following. 1. the equipment depreciates $600 per month. 2. two-thirds of the unearned rent revenue was earned during the quarter. 3. the note payable is dated january 1 and bears 12% interest. 4. supplies on hand total $800. 5. the insurance policy is a two-year policy dated january 1. instructions: a. prepare the adjusting entries at march 31, assuming that adjusting entries are made quarterly. additional accounts are: depreciation expense, insurance expense, interest payable, and supplies expense. b. compute the ending balances for prepaid insurance, unearned rent revenue, and rent revenue, and indicate in which financial statement those items will be reported.