Question

QUESTION 3 Accounting Cycle Inferring ournal Entries 25 points Prepare the necessary adjusting entries on December 31, 2018 for ACCPTC a y no adjusting entries w t no financial statements were prepared unge a On October 1, 2018 ACCPT lent 500 000 to another company. A note was signed principal and 8% interest to be paid on September 30, 2019 in b) On August 1. 2018. ACCPT collected $24.000 in advance rent from another company that is renting a portion of ACCPT's factory. The $24,000 represents rent from August 1, 2018 to July 31, 2019, and the entire amount was credited to rent revenue on August 1. 2018 There is no beginning balance in related accounts C) The company started to sell gift cards that can be redeemed for merchandise in 2018. The company records these sales as Deferred Revenue. During the year, the company collected $20,400 cash from selling the gift cards. At December 31, 2018, the company determined that $4,700 of gift cards were unreedemed. 4 pts.

Answer 1

Answer a)

Interest receivable ($90,000 8% 3/12) = $1,800

Rent expense ($6,000 2/3) = $4,000

Debit Credit Rent revenue ($12,000 7/12) = $7,000

Supplies expense ($2,000 + 6,500 3,250) = $5,250

Journal	Debit	Credit
Interest Recievable	$1,800
($90,000 8% 3/12)
To Interest Revenue		$1,800
Rent Expense	$4,000
To Prepaid Rent		$4,000
Rent Revenue	$7,000
To Unearned Rent Revenue		$7,000

Answer b)

	Record journal entry made on 31st march 2018.
31st Dec'18	Rent Revenue A/c    Dr	14000
	To Unearned rent revenue		14000
	(Rent income earned during the year recorded)
	Rent Revenue = 24000*7/12
	Rent Revenue = 14,000

Answer c)

Gifts card not redeemed are the income for the company. Hence a journal entry for recognition of revenue is to be made

Therefore Deferred revenue must be debited and sales revenue must be credited by the amount that has not been redeemed

Journal entry for unreedemed gift cards

Deferred revenue $4,700

To sales Revenue $4,700