Question

Required information The general ledger of Zips Storage at January 1, 2021, includes the following account balances: Credits Debits $ 26,600 17,400 16,000 168,000 Accounts Cash Accounts Receivable Prepaid Insurance Land Accounts Payable Deferred Revenue Common Stock Retained Earnings Totals $ 8,700 7,800 163,000 48,500 $228,000 $ 228,000 The following is a summary of the transactions for the year: 1. January 9 Provide storage services for cash, $154,100, and on account, $62,200. 2. February 12 Collect on accounts receivable, $53,500. 3. April 25 Receive cash in advance from customers, $14,900. 4. May 6 Purchase supplies on account, $13,200. 5. July 15 Pay property taxes, $10,500. 6. September 10 Pay on accounts payable, $13,400. 7. October 31 Pay salaries, $143,600. 8. November 20 Issue shares of common stock in exchange for $47,000 cash. 9. December 30 Pay $4,800 cash dividends to stockholders. 5. Record adjusting entries. Insurance expired during the year is $9,000. Supplies remaining on hand at the end of the year equal $4,900. Provide services of $13,800 related to cash paid in advance by customers. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) No General Journal Debit Credit Transaction December 31 1 2 December 31 December 31

Answer 1

Requirement 5:

Adjusting entries:

No.	Date	Account title and explanation	Debit	Credit
1	December 31	Insurance expense	$9,000
		Prepaid insurance		$9,000
		[To record insurance expense]
2	December 31	Supplies expense	$8,300
		Supplies		$8,300
		[To record supplies expense]
3	December 31	Deferred revenue	$13,800
		Service revenue		$13,800
		[To record service revenue from deferred]

Explanations:

1. Insurance expired during the year is $9,000. It means it's an expense for the period.

2. Supplies expense = Supplies at the beginning + Purchases during the period - Supplies at the ending

Supplies expense = $0 + $13,200 - $4,900

Supplies expense = $8,300

3. Credit to 'Deferred revenue' when cash received in advance from the customer. At the time of services performed, Debit to 'Deferred revenue' and Credit to 'Service revenue' for revenue recognition to the extent of services performed.

So that services performed for the amount of $13,800 should be debit to 'Deferred revenue' and credit to 'Service revenue' for revenue recognition.