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Qu Required: Prepare adjusting journal entries for T] Watches given the following nformation. Adjusting entries are prepared only at year end. Indicate if the adjusting entry should be reversed by circling yes or no. a) The company pays its employees on Friday for a five day workweek are $25,000. This year December 31 falls on a Wednesday. The employees wi January 2. ended on Friday. Weekly salaries be paid on Friday Should this adjustment be reversed? Yes No On August 1 the company accepted $6,000 for services to be performed over the next 12 months. b) Should this adjustment be reversed? Yes No c) On October 1 the company paid $12,000 for 24 months of rent. Yes No Should this adjustment be reversed?
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Solution: Naming convention is not available, can be slightly differnet: ournal entries a) Date Account title and explaination Debit Credit $ 15,000 Dec.31 Salaries and Wages Expense (25000/5*3) $ 15,000 Salaries and Wages Payable To record the accrual of salaries expense) Generally it is not reversed.Because, it is the exact accrual of actual expense of the period But it depends on the decision of management. Yes b) Date Account title and explaination Dec.31 Unearned Service Revenue Debit Credit S 2,500 Service Revenue (6000/12) *5 To recognize the service revenue) $ 2,500 No Because it is recognization of realized revenue c DateAccount title and explaination Debit Credit $ 1,500 Dec.31Rent Expense (12000/24)*3 $ 1,500 Prepaid Rent To recognize the service revenue) No Because it is recognization of realized rent expense

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