Concept explainers
(1)
To journalize: The entry on October 1, using the alternative method of deferred revenues.
(2)
Deferred revenues
Collection of cash in advance to render service or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an
To record: The adjusting entry on December 31, 2016.
Want to see the full answer?
Check out a sample textbook solutionChapter 3 Solutions
MyLab Accounting with Pearson eText -- Access Card -- for Horngren's Financial & Managerial Accounting (My AccountingLab)
- Adjusting Entries Exercise 3-52 Allentown Services Inc. is preparing adjusting entries for the year ending December 31, 2019. The following data are available: Interest is owed at December 31, 2019, on a 6-month, 8% note. Allentown borrowed $120,ooo from NBD on September 1, 2019. Allentown provides daily building maintenance services to Mack Trucks for a quarterly fee of $2,700 payable on the fifteenth of the month following the end of each quarter. No entries have been made for the services provided to Mack Trucks during the quarter ended December 31, and the related bill will not be sent until January 15, 2020. At the beginning of 2019, the cost of office supplies on hand was $1,220. During 2019, office supplies with a total cost of $6,480 were purchased from Office Depot and debited to office supplies inventory. On December 31, 2019, Allentown determined the cost of office supplies on hand to be $970. On September 23, 2019, Allentown received a $7,650 payment from Bethlehem Steel for 9 months of maintenance services beginning on October 1, 2019. The entire amount was credited to unearned service revenue when received. Required: Prepare the appropriate adjusting entries at December 31, 2019. CONCEPTUAL CONNECTION What would be the effect on the balance sheet and the income statement if the accountant failed to make the above adjusting entries?arrow_forwardThe trial balance of Sports Connection at June 30, 2013, the end of the current fiscal year, is as follows: Adjustment information is as follows: a. Supplies on hand as of June 30, 2013, 450. b. Insurance premiums that expired during the year, 2,420. c. Depreciation on equipment during the year, 1,500. d. Included in the rent expense of 30,000 is 1,200 that is prepaid for July 2013. e. Salaries accrued but not paid at June 30, 2013, 1,440. f. Merchandise inventory on June 30, 2013, 68,864. Open the file P2WORK from the website for this book at cengagebrain.com. Enter the formulas in the appropriate cells on the worksheet. Then enter the adjusting amounts in columns E and G. Also, in column D or F, insert the letter corresponding to the adjusting entry (ae). (Note: Not all textbooks handle the change in inventory as an adjustment. Use the method for handling inventory that is prescribed in your textbook.) Column A is frozen on the screen to assist you in completing requirement 3.arrow_forwardThe trial balance of Sports Connection at June 30, 2013, the end of the current fiscal year, is as follows: Adjustment information is as follows: a. Supplies on hand as of June 30, 2013, 450. b. Insurance premiums that expired during the year, 2,420. c. Depreciation on equipment during the year, 1,500. d. Included in the rent expense of 30,000 is 1,200 that is prepaid for July 2013. e. Salaries accrued but not paid at June 30, 2013, 1,440. f. Merchandise inventory on June 30, 2013, 68,864. As the accountant for Sports Connection, you have been asked to prepare adjusting entries and financial statements to complete the accounting cycle for the year. A worksheet called P2WORK has been provided to assist you in this assignment. As you review this worksheet, it should be noted that columns H and I will automatically change when you enter values in columns E and G.arrow_forward
- The trial balance of Sports Connection at June 30, 2013, the end of the current fiscal year, is as follows: Adjustment information is as follows: a. Supplies on hand as of June 30, 2013, 450. b. Insurance premiums that expired during the year, 2,420. c. Depreciation on equipment during the year, 1,500. d. Included in the rent expense of 30,000 is 1,200 that is prepaid for July 2013. e. Salaries accrued but not paid at June 30, 2013, 1,440. f. Merchandise inventory on June 30, 2013, 68,864. Complete the income statement and balance sheet by entering formulas in columns J, K, L, and M that reference the appropriate cells in column H or I. Net income will be automatically calculated at the bottom of the income statement and balance sheet columns. Check to be sure that these numbers are the same. Enter your name in cell A1. Save the completed file as P2WORK3. Print the worksheet. Also print your formulas using landscape orientation and fit-to-1 page scaling. Check figure: Net income (cell J34), 37,902.arrow_forwardThe trial balance of Sports Connection at June 30, 2013, the end of the current fiscal year, is as follows: Adjustment information is as follows: a. Supplies on hand as of June 30, 2013, 450. b. Insurance premiums that expired during the year, 2,420. c. Depreciation on equipment during the year, 1,500. d. Included in the rent expense of 30,000 is 1,200 that is prepaid for July 2013. e. Salaries accrued but not paid at June 30, 2013, 1,440. f. Merchandise inventory on June 30, 2013, 68,864. In the space provided below, prepare an income statement, a capital statement (statement of owners equity), and a balance sheet. Use the corrected worksheet (P2WORK4) as a basis for your work. Assume no additional owner investments were made during the year.arrow_forwardThe unadjusted trial balance of La Mesa Laundry at August 31, 2016, the end of the fiscal year, follows: The data needed to determine year-end adjustments are as follows: a. Wages accrued but not paid at August 31 are 2,200. b. Depreciation of equipment during the year is 8,150. c. Laundry supplies on hand at August 31 are 2,000. d. Insurance premiums expired during the year are 5,300. Instructions 1. For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as Aug. 31 Bal. In addition, add T accounts for Wages Payable, Depreciation Expense, Laundry Supplies Expense, Insurance Expense, and Income Summary. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (1) as needed. 3. Journalize and post the adjusting entries. Identify the adjustments by Adj. and the new balances as Adj. Bal. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of owners equity (no additional investments were made during the year), and a balance sheet. 6. Journalize and post the closing entries. Identify the closing entries by Clos. 7. Prepare a post-closing trial balance.arrow_forward
- Adjustment for unearned revenue On June 1, 20Y2, Herbal Co. received 18,900 for the rent of land for 12 months. Journalize the adjusting entry required for unearned rent on December 31, 20Y2.arrow_forwardEXPENSE METHOD OF ACCOUNTING FOR PREPAID EXPENSES Davidsons Food Mart paid 1,200 in advance to the local newspaper for advertisements that will appear monthly. The following entry was made: At the end of the year, December 31, 20--, Davidson received notification that advertisements costing 800 had been run. Prepare the adjusting entry.arrow_forwardAdjustments for unearned and accrued fees The balance in the unearned fees account, before adjustment at the end of the year, is $900,000. Of these fees, $775,000 have been earned. In addition, $289,500 of fees have been earned hut not hilled to clients. What are the adjustments (a) to adjust the unearned fees account and (h) to record the accrued fees? Indicate each account affected, whether the account is increased or decreased, and the amount of the increase or decrease.arrow_forward
- College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningExcel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage