Question

*E4.20 (LO 6) AP Rosborough Company provides property management services to a variety of companies. At its fiscal year end on April 30, 2021, adjustments were required for the following items: Prepare adjusting and reversing entries. 1. Services of $600 were provided but not recorded or collected. 2. Of the balance in the Unearned Revenue account, $250 of services have been provided. 3. Depreciation expense for the year ended April 30, 2021, was $4,850. 4. Interest of $545 on a note payable had accrued. 5. Prepaid insurance of $385 had expired. 6. Property taxes for the calendar year are payable every year on June 30. The company estimated property taxes for 2021 to be $3,912. Instructions a. Identify the adjustments for which it could be useful to prepare reversing

Answer 1

Requirement a: Items 2, 4, and 5 are can be useful to prepare reversing entries. Requirement b: Debit S Credit S Date Item No. Account Title May 1, 2021 250 Service Revenue Unearned Revenue (To reverse April 30 adjusting entry) 250 Interest Payable Interest Expense (To reverse April 30 adjusting entry) 545 4 545 Prepaid Insurance Insurance Expense (To reverse April 30 adjusting entry) 5 385 385

Requirement e: Reversing Entries are made when the adjusting entries have materialized, and simply reversing the adjusting entries. Explanation: For Item No. 1, the revenue has never been recorded. Hence, it should be recorded for the first time. For Item No.3 Depreciation is an expense that is charged at onee. Hence, no adjusting entry is required for this item For Item No. 6 Taxes Payable ie., for the amount accrued an entry is made for this item now and reversed when it is paid on June 30. Unearned Revenue has now been earned; hence, a reversing entry is made. Interest Expense earlier was recorded, and now to be paid. Hence, a reversing entry is made Insurance has been used. Hence, a reversing entry is made.