Question

Problem 1 Prepare adjusting entries as of December 31 for the following (assume company has not made any adjusting entries during the year). 1. On September 1 the company received $8,000 as payment in advance for services to be rendered for the 8 month period starting October 1. The $8,000 was recorded as service revenue when received. 2. At the start of the year the company had $4,200 of supplies on hand. During the year the company purchased $5,100 of supplies. At year end supplies on hand totaled $3,100. The company records supplies in an asset account. 3. On August 1 the company borrowed $50,000 by signing an 18-month, 6% note payable. Interest and principal are due at maturity.

Answer 1

Credit Debit $3,000 Transaction General Journal Unearned Service Revenue Service Revenue ($8,000 x 3/8) $3,000 2 $6.200 Supplies Expense Supplies ($4,200 + $5,100 - $3,100) $6,200 3 $1,250 Interest Expense Interest Payable ($50,000 x 6% x 5/12) $1,250