Question

1. On July 1, 2021, Gamecock receives $6,000 from a customer for advertising services to be given evenly over the next 10 months. Gamecock credits Deferred Revenue. 2. At the beginning of the year, Gamecock's depreciable equipment has a cost of $28,000, a four-year life, and no salvage value. The equipment is depreciated evenly (straight-line depreciation method) over the four years. 3. On May 1, 2021, the company pays $4,800 for a two-year fire and liability insurance policy and debits Prepaid Insurance. 4. On September 1, 2021, the company borrows $20,000 from a local bank and signs a note. Principal and interest at 12% will be paid on August 31, 2022. 5. At year-end there is a $2,700 debit balance in the Supplies (asset) account. Only $1,000 of supplies remains on hand. Required: Record the necessary adjusting entries on December 31, 2021. No prior adjustments have been made during 2021. (Do not round intermediate calculations. If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Credits Adjusting Journal entries :- Date Accounts Title & Explanation Debit $ 31-Dec-21 Deferred Revenue (6000/10)*6 3,600 To Service Revenue (Entry for advertising services provided for 6 months) 3,600 31-Dec-21 Depreciation expenses - Equipment (28000/4) 7,000 To Accumulated Depreciation - Equipment (Entry for recording of Depreciation on equipment) 7,000 31-Dec-21 Insurance expense (4800*(8/24)) 1,600 To Prepaid Insurance (Entry for recording of Insurance expenses for expired period) 1,600 1,600 31-Dec-21 Interest expense (20000*12%*(8/12) To Interest Payable (Entry for accrued interest on loan for 8 months) 1,600 1,700 31-Dec-21 Supplies expense (2700-1000) To Supplies (Entry for supplies consumed) 1,700