Question

Hong Kong Motor Company (HKMC) issues monthly financial statements. REQUIREMENT: Record the adjusting entries HKMC needs to make at the end of October 2014 At the end of September 2014 HKMC's balance sheet showed an Unearmed Revenues balance of $18,250. During the month of October 2014, HKMC collected $242,000 from customers, all recorded as a CR to Unearned Revenues. At the end of October, HKMC calculates that it still owes its customers $58,000 in Unearned Revenues. HKMC pays its employees a total weekly salary of $24,000 on each Friday for work

Answer 1

Journal

October 31	Unearned revenue	202,250
	Revenue		202,250
October 31	Salaries expense	9,600
	Salaries payable		9,600
October 31	Supplies expense	4,490
	Supplies		4,490

Revenues earned during October = Unearned revenues on September 30 + Revenues received during October - Unearned revenues on October 31

= 18,250 + 242,000 - 58,000

= $202,250

Salaries payable on October 31 for two days = 24,000 x 2/5

= $9,600

Supplies expense = Supplies beginning - Supplies ending

= 6,290 - 1,800

= $4,490

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