Cullumber Company has the following balances in selected
accounts on December 31, 2020.
Accounts Receivable | $ 0 | |
Accumulated Depreciation—Equipment | 0 | |
Equipment | 8,000 | |
Interest Payable | 0 | |
Notes Payable | 10,000 | |
Prepaid Insurance | 3,960 | |
Salaries and Wages Payable | 0 | |
Supplies | 2,200 | |
Unearned Service Revenue | 28,000 |
All the accounts have normal balances. The information below has
been gathered at December 31, 2020.
1. | Cullumber Company borrowed $11,400 by signing a 9%, one-year note on September 1, 2020. | |
2. | A count of supplies on December 31, 2020, indicates that supplies of $820 are on hand. | |
3. | Depreciation on the equipment for 2020 is $1,200. | |
4. | Cullumber Company paid $3,960 for 12 months of insurance coverage on June 1, 2020. | |
5. | On December 1, 2020, Cullumber collected $28,000 for consulting services to be performed from December 1, 2020, through March 31, 2021. The company had performed 1/4 of the services by December 31. | |
6. | Cullumber performed consulting services for a client in December 2020. The client will be billed $4,200. | |
7. | Cullumber Company pays its employees total salaries of $5,400 every Monday for the preceding 5-day week (Monday through Friday). On Monday, December 29, employees were paid for the week ending December 26. All employees worked the last 3 days of 2020. |
Prepare adjusting entries for the seven items described above.
(Credit account titles are automatically indented when
the amount is entered. Do not indent manually.)
Adjusting Entries:
Date | Account title and Explanation | Debit | Credit | |
1 | Dec 31,2020 | Interest expense [11,400 x 9% x 4/12] | $342 | |
Interest payable | $342 | |||
[To record accrued interest expense] | ||||
2 | Dec 31,2020 | Supplies expense [2,200-820] | $1,380 | |
Supplies | $1,380 | |||
[To record supplies expense] | ||||
3 | Dec 31,2020 | Depreciation expense | $1,200 | |
Accumulated depreciation-Equipment | $1,200 | |||
[To record depreciation expense] | ||||
4 | Dec 31,2020 | Insurance expense [3,960 x 7/12] | $2,310 | |
Prepaid insurance | $2,310 | |||
[To record insurance expense] | ||||
5 | Dec 31,2020 | Unearned service revenue | $7,000 | |
Service revenue | $7,000 | |||
[To record revenue from unearned] | ||||
6 | Dec 31,2020 | Accounts receivable | $4,200 | |
Service revenue | $4,200 | |||
[To record accrued service revenue] | ||||
7 | Dec 31,2020 | Salaries expense [5,400 x 3/5] | $3,240 | |
Salaries payable | $3,240 | |||
[To record accrued salaries expense] |
How did you get 7000 for the unearned service revenue?
Cullumber Company has the following balances in selected accounts on December 31, 2020. Accounts Receivable $...
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