Question

Prepare journal entries, as well as adjusted entries for transactions. With work shown especially for 6A-6B...

Prepare journal entries, as well as adjusted entries for transactions. With work shown especially for 6A-6B

5. Division 1 purchases 24 month insurance for $48,000 on 08/31

6. (A) Division 2 sold $50,000 of services for cash and had $80,000 of expenses paid in cash

6 (A) Division 2 was sold for cash of $10,000

6 (B) Division 2 is sold. Total net loss was $30,000, Gain on sale was $10,000

7. Division 1 Purchased Bonds for $50,000 cash that was worth $70,000 at year end

8. Division 1 Total Salary expense was $200,000

9. Issued 10,000 shares of common stock for $100,00 cash on 09/01


1. issue 50,000 shares of 1.00 per share for $500,000
2. create Division 1 and 2 (no journal entry)
3. sell $400,000 of Services from Division 1 for cash
4. Division 1 borrows 50,000 cash on 03/01, i = interest, principal are due 1/1/x2

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Answer #1

Adjusting Entries:

Date Account Titles and Explanationn Debit Credit
5) Prepaid Insurance $48,000
   Cash $48,000
(To record the prepayment of insurance)
6A) Cash $50,000
   Service Revenue $50,000
(To record the services provided for cash)
6A) Expenses $80,000
   Cash $80,000
(To record the payment of expenses by cash)
6A) Cash $10,000
   Service Revenue $10,000
(To record the services provided for cash)
6B) Cash $10,000
   Gain on sale $10,000
(To record the gain on sale)
Note: It suppose to give the item sold so that the complete journal entry can be given. Since, there is no item given which was sold so the journal entry is prepared only for the gain.
7) Long-term Investment Bonds ($70,000 - $60,000) $10,000
   Fair value gain in the bonds $10,000
(To record the fair value adjustment on bonds)
8) Salaries Expense $200,000
   Salaries Payable $200,000
(To record the salaries accrued for the period)
9) No adjusting entry is prepared because shared were issued already for cash so cash account is already debited and common stock is already credited so no adjustment is required.
1) No adjusting entry is prepared because shared were issued already for cash so cash account is already debited and common stock is already credited so no adjustment is required.
3) Cash $400,000
   Service Revenue $400,000
(To record the service revenue earned by cash)
4) Rate of interest is not given to prepare the adjusting entry for interest expense. Usually, it is - Debit Interest Expense and Credit Interest Payable.

Note: If you get any queries then please do comment, i will help you.

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