Question

Question 2

(10 marks)

Jane’s Technically Correct, a proprietorship, had a December 31 year end.

Required:

Record the initial and subsequent transaction for each of the following independent situations using the numerals to group the transaction:

1. June 01: Jane’s Technically Correct received $ 24,000 for a 12-month service contract.

December 31: A year-end adjusting journal entry is required to update the balance.

2. January 13: Jane’s Technically Correct did $ 10,000 software updates for a client. Payment will be received at the end of February.

February 28: A journal entry is required to record receipt of payment.

3. November 01: Jane’s Technically Correct purchased $ 7,000 office supplies on account.

December 31: Jane counted the office supplies and noted that there was $ 6,000 supplies on hand. Thus, the balance needs to be updated.

4. May 01: Because of additional job contracts, Jane’s Technically Correct leased a computer for $900, which represented a 5-month rental contract.

October 01: Jane’s Technically Correct needs to adjust the prepaid account.

Answer 1

Jouran Entry		Dr	Cr
		$	$
1
Jun-01	Cash A/c	24,000
	To Income from services a/c		24,000
Dec-31	Income form Services a/c	10,000
	To Unearned Income a/c		10,000
	(Unearned income of 5 months 24000/12*5)
2
Jan-13	Accounts receivable a/c	10,000
	To income from services		10,000
Feb-28	Cash A/c	10,000
	Accounts receivable a/c		10,000
3
Nov-01	Office Supplies Exp. a/c	7,000
	To Cash a/c		7,000
Dec-31	Closing stock of office supplies	6,000
	To   Office Supplies Exp. a/c		6,000
4
May-01	Prepaid Expenses for rent of equipment a/c	900
	To Cash		900
Oct-01	Rent a/c	900
	To Prepaid Expenses for rent of equipment a/c		900