Question

Jordan Company's annual accounting year ends on December 31. It is now December 31, 2018, and all of the 2018 entries have been made except for the following: a. The company owes interest of $760 on a bank loan. The interest will be paid when the loan is repaid on September 30, 2019. No interest has been recorded. b. On September 1, 2018, Jordan collected six months' rent of $5,700 on storage space. At that date, Jordan debited Cash and credited Deferred Revenue for $5,700. c. The company earned service revenue of $3,600 on a special job that was completed December 29, 2018. Collection will be made during January 2019. No entry has been recorded. d. On November 1, 2018, Jordan paid a one-year premium for property insurance of $4,560, for coverage starting on that date. Cash was credited and Prepaid Insurance was debited for this amount. e. At December 31, 2018, wages earned by employees but not yet paid totaled $1,400. The employees will be paid on the next payroll date, January 15, 2019. f. Depreciation of $1,300 must be recognized on a service truck purchased this year. g. The income after all adjustments other than income taxes was $33,000. The company's income tax rate is 30%. Compute and record income tax expense.

Answer 1

	Asset		=	Liabilities		+	Stockholder's Equity
a.			=	Interest payable	$         760	+	Interest expense	$     -760
b.			=	Deferred revenue	$   -3,800	+	Rent revenue	$   3,800
c.	Accounts receivable	$     3,600	=			+	Service revenue	$   3,600
d.	Prepaid Insurance	$       -760	=			+	Insurance expense	$     -760
e.			=	Salaries and wages payable	$     1,400	+	Salaries and wages expense	$ -1,400
f.	Accumulated Depreciation (Truck)	$   -1,300	=			+	Depreciation expense	$ -1,300
g.			=	Income tax payable	$     9,900	+	Income tax expense	$ -9,900

	Formulas:
	Asset		=	Liabilities		+	Stockholder's Equity
a.			=	Interest payable	760	+	Interest expense	-760
b.			=	Deferred revenue	=-5700*4/6	+	Rent revenue	=5700*4/6
c.	Accounts receivable	3600	=			+	Service revenue	3600
d.	Prepaid Insurance	=-4560*2/12	=			+	Insurance expense	=-4560*2/12
e.			=	Salaries and wages payable	1400	+	Salaries and wages expense	-1400
f.	Accumulated Depreciation (Truck)	-1300	=			+	Depreciation expense	-1300
g.			=	Income tax payable	=33000*0.3	+	Income tax expense	=-33000*0.3