Question

Designer Architects had the following additional information at its November 30, 2017 year-end: a. The Unearned Revenue account showed a balance of $64,000, which represented four months of services paid in advance by a client for services beginning on October 15, 2017. b. The payroll register showed the following unpaid amounts as at November 30: Premium 100.41" Income Taxes 1.310.00 CPP 203.98 Total Deductions 1,614.39 Net Payable ,085.61 Office Salaries 2,700.00 Sales S alaries 2.000.00 3 *These values are based on assumed payroll deductions. **The employer's portions of El and CPP are 1.4 times and 1 times the employees' portion respectively. c. The November utility bill in the amount of $2,360.00 was unpaid and unrecorded at November 30. Required: Prepare the appropriate entries at year-end based on the above information: (Round the final answers to 2 decimal places.) View transaction list Journal entry worksheet 2 3 4 Record the earned portion of unearned revenue. Note: Enter debits before credits. General Journal Debit Credit Date Nov 30, 2017 Record entry Clear entry View general journal

Answer 1

Designer Architects Requirement d. Debit in $ Credit in $ 24000 24000 Journal Enteries Date Particulars 30.11.2017 Unearned revenue a/c Dr. To Service revenue Earned portion of unearned revenue: ($64,000/ 4 months) x 1.5 months = $24,000 Analysis Component: Description Effect Amount The income statement would be Understated by 16595.45 On the balance sheet, liabilities would be Overstated by 16595.45 On the balance sheet, equity would be understated by 16595.45 On the balance sheet, assets would be No effect 2000 2700 30.11.2017 Sales salaries expense a/c Dr. Office salaries expense a/c Dr. To Salaries payable To Employees' income taxes payable To El payable To CPP payable 3085.61 1310 100.41 203.98 Liabilities: $3085.61+ $1310+ $100.41+$203.98+$140.57+$203.98+ $2360-$24000 = -16595.45 -> overstated by $16,595.45 Equity: $24000-$2000- $2700- $140.57- $203.98- $2360 = 16595.45 -> understated by $16,595.45 140.57 203.98 30.11.2017 El expense a/c CPP expense a/c Dr. To El payable To CPP payable El expense: $100.41 x 1.4 = $140.57 CPP expense: $203.98 x 1= $203.98 140.57 203.98 Dr. 2360 30.11.2017 Utilities expense a/c To Accounts payable 2360

Designer Architects Requirement d. Debit in $ Credit in $ 24000 24000 Journal Enteries Date Particulars 30.11.2017 Unearned revenue a/c Dr. To Service revenue Earned portion of unearned revenue: ($64,000/ 4 months) x 1.5 months = $24,000 Analysis Component: Description Effect Amount The income statement would be Understated by 16595.45 On the balance sheet, liabilities would be Overstated by 16595.45 On the balance sheet, equity would be understated by 16595.45 On the balance sheet, assets would be No effect 2000 2700 30.11.2017 Sales salaries expense a/c Dr. Office salaries expense a/c Dr. To Salaries payable To Employees' income taxes payable To El payable To CPP payable 3085.61 1310 100.41 203.98 Liabilities: $3085.61+ $1310+ $100.41+ $203.98+ $140.57+ $203.98+ $2360-$24000 = -16595.45 -> overstated by $16,595.45 Equity: $24000-$2000- $2700- $140.57- $203.98- $2360 =-16595.45 -> understated by $16,595.45 140.57 203.98 30.11.2017 El expense a/c CPP expense a/c Dr. To El payable To CPP payable El expense: $100.41 x 1.4 = $140.57 CPP expense: $203.98 x 1= $203.98 140.57 203.98 Dr. 2360 30.11.2017 Utilities expense a/c To Accounts payable 2360