Question

Required information (The following information applies to the questions displayed below.] Johnson's Boat Yard, Inc., repairs, stores, and cleans boats for customers. It is completing the accounting process for the year just ended on November 30. The transactions for the past year have been journalized and posted. The following data with respect to adjusting entries at year-end are available: a. Johnson's winterized (cleaned and covered) three boats for customers at the end of November but did not record the service for $3,800. b. On October 1, Johnson's paid $1,800 to the local newspaper for an advertisement to run every Thursday for 12 weeks. All ads have been run except for three Thursdays in December to complete the 12-week contract. c. Johnson's borrowed $180,000 at a(n) 11 percent annual interest rate on April 1 of the current year to expand its boat storage facility. The loan requires Johnson's to pay the interest quarterly until the note is repaid in three years. Johnson's paid quarterly interest on July 1 and October 1. d. The Sanjeev family paid Johnson's $4,500 on November 1 to store its sailboat for the winter until May 1 of the next fiscal year. Johnson's credited the full amount to Unearned Storage Revenue on November 1. e. Johnson's used boat-lifting equipment that cost $230,000; $23,000 was the estimated depreciation for the current year. f. Boat repair supplies on hand at the beginning of the current year totaled $16,800. Repair supplies purchased and debited to Supplies during the year amounted to $47,900. The year-end count showed $13,100 of the supplies on hand. g. Wages of $4,000 earned by employees during November were unpaid and unrecorded at November 30. The next payroll date will be December 5 of the next fiscal year. Required: 1. Identify each of these transactions as a deferred revenue, deferred expense, accrued revenue, or accrued expense. Johnson's winterized (cleaned and covered) three boats for customers at the end of November but did not record the service for $3,800. On October 1, Johnson's paid $1,800 to the local newspaper for an advertisement to run every Thursday for 12 weeks. All ads have been run except for three Thursdays in December to complete the 12-week contract. Johnson's borrowed $180,000 at a(n) 11 percent annual interest rate on April 1 of the current year to expand its boat storage facility. The loan requires Johnson's to pay the interest quarterly until the note is repaid in three years. Johnson's paid quarterly interest on July 1 and October 1. The Sanjeev family paid Johnson's $4,500 on November 1 to store its sailboat for the winter until May 1 of the next fiscal year. Johnson's credited the full amount to Unearned Storage Revenue on November 1. Johnson's used boat-lifting equipment that cost $230,000; $23,000 was the estimated depreciation for the current year. Boat repair supplies on hand at the beginning of the current year totaled $16,800. Repair supplies purchased and debited to Supplies during the year amounted to $47,900. The year-end count showed $13,100 of the supplies on hand. Wages of $4,000 earned by employees during November were unpaid and unrecorded at November 30. The next payroll date will be December 5 of the next fiscal year.

Answer 1

Solution:

Transaction	Answers	Explanation
a	Accrued Revenue	Because revenue has been earned but no transaction has been recorded yet.
b	Deferred Expense	Because amount is already paid to local newspaper entity for the up coming 3 Thursdays
c	Accrued Expense	Because we have to pay October and November months interest expense
d	Deferred Revenue	Because we received the amount in advance for the contract to be completed in next fiscal year
e	Deferred Expense (Depreciation Expense)	Because asset is purchased in one year and cost is allocate to number of useful life of asset
f	Deferred Expense	Because expense is already incurred and now adjusting to asset account
g	Accrued Expense	Because expense is already incurred and it is unpaid and unrecorded as on November 30th.