Question

Can you help me to solve the problem 4-15B.

Adjusting, receiving and subsequent cash entries

Smart resource company's unadjusted trail balance on December 31, 2020, the end of its annual accounting period, is as follows

Problem 4-14B Cal You are the account at December 31, 20 a. Calculate the 4.14B Calculating current ratios and debt to equity ratios LO7 are the accountant at Spin Master. Refer to Appendix III for Spin Master's Consolidated Balance Sheets as mber 31, 2017. Your manager has asked you to do the following: alculate the current ratio, quick ratio, and debt to equity ratios for 2016 and 2017 (round to two de places). Comment on the ratios, the change between 2016 and 2017 and what additional information you would ant to know to get a better picture of Spin Master's financial performance. Problem 4-15B Adjusting, reversing, and subsequent cash entries LOS Smart Resource Company's unadjusted trial balance on December 31. 2020. the end of its annual accounting period, is as follows: Credit Debit $ 73,725 37,500 4,200 45,000 $ 18,000 90,000 37,500 60.000 Account Cash...... Note receivable................ Office supplies............... Land. Unearned service revenue........... Note payable....... Justin Chambers, capital........... Justin Chambers, withdrawals. Service revenue... Interest income....... Rent revenue..... Salaries expense. Insurance expense..... Interest expense..... Totals.... 267.000 2,550 12,375 193,500 4,950 8,550 $427,425 $427,425

Information necessary to prepare adjusting entries is as follows:

a. Employees, who are paid $7,500 every two weeks, have earned $5,250 since the last payment. The next payment of $7,500 will be on January 4.

b. Smart Resource has earned but not recorded revenue for $8,250 for services provided to a customer who will pay for the work on January 24. At that time, the customer will also pay $3,100 for services Smart Resources will perform in early January.

c. Smart Resource's rents office space to a tenant who has paid only $450 of the $1,125 rent for the December. On January 12, the tenant will pay the remainder along with the rent for January.

d. An inventory of office supplies discloses $675 of unused supplies.

e. Preminums for insurance against injuries to employees are paid monthly. The $450 premium for December will be paid January 12.

f. Smart Resources owes $90,000on a note payable that requires quarterly payments accrued interest. The quarterly payments of $2,700 each are made on the 15th of January, April, July, and October.

g. An analysis of Smart Resources's service contracts with customers shows that $6,300 of the amount customers have prepaid remains unearned.

h. Smart Resources has a $37,500 note receivable on which interest of $175 has accrued. On January 22, the note and the total accrued interest of $575 will be repaid to Smart Resource.

Required

1. Prepare adjusting journal entries.

2. Prepare reversing entries.

3. Prepare journal entries to record the January 2021 cash receipts and cash payments identified in the above information.

Answer 1

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Part 1 Adjusting Journal Entries:					Part 2 Reversing Entries:
Event	Account	Debit	Credit		Event	Account	Debit	Credit
a	Salaries Expense	$     5,250		R	a	Salaries Payable	$     5,250
	Salaries Payable		$     5,250			Salaries Expense		$     5,250
	(To record salaries expense for the month)					(To reverse accrued salaries)
b	Accounts Receivable	$     8,250			b	Service Revenue	$     8,250
	Service Revenue		$     8,250			Accounts Receivable		$     8,250
	(To record service revenue earned)					(To reverse revenue earned)
c	Rent Receivable	$         675			c	Rent Revenue	$         675
	Rent Revenue		$         675			Rent Receivable		$         675
	(To record rent revenue accrued) ($1,125-$450)					(To reverse rent revenue accrued)
d	Office Supplies Expense	$     3,525			e	Insurance payable	$         450
	Office Supplies		$     3,525			Insurance Expense		$         450
	(To record supplies used) $4,200-$675					(To reverse insurance expense)
e	Insurance Expense	$         450			f	Interest Payable	$     2,250
	Insurance Payable		$         450			Interest Expense		$     2,250
	(To record insurance expense)					(To reverse insterest expense)
f	Interest Expense	$     2,250			h	Interest Income	$         175
	Interest Payable		$     2,250			Interest Receivable		$         175
	(To record interest Expense) $2,700/3*2.5					(To reverse interest income accrued)
g	Unearned Service Revenue	$   11,700
	Service Revenue		$   11,700
	(To record revenue earned) $18,000-$6,300
h	Interest Receivable	$         175
	Interest Income		$         175
	(To record interest accrued)
Part 3: January Entries:
Jan 4	Salaries Expense	$     7,500
	Cash		$     7,500
	(To record salaries expense)
Jan 12	Cash	$     1,800
	Rent Revenue		$     1,800
	(To record rent revenue) $625+$1,175
Jan 12	Insurance Expense	$         450
	Cash		$         450
	(To record insurance payment)
Jan 15	Interest Expense	$     2,700
	Cash		$     2,700
	(To record insterest payment)
Jan 22	Cash	$   38,075
	Note Receivable		$   37,500
	Interest Income		$         575
	(To record receipt of note and interest)
Jan 24	Cash	$   11,350
	Service Revenue		$   11,350
	(To record receipt of service revenue) $8,250+$3,100