Question

Consider the following transactions for a company: Equipment costing $40,200 is purchased at the beginning of the year for cash. Depreciation on the equipment is $6,700 per year. On June 30, the company lends its chief financial officer $47,000; principal and interest at 7% are due in one year. On October 1, the company receives $14,800 from a customer for a one-year property insurance policy. Deferred Revenue is credited. Required: For each item, record the necessary adjusting entry for the company at its year-end of December 31. No adjusting entries were made during the year. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.) Consider the following transactions for a company: Equipment costing $40,200 is purchased at the beginning of the year for cash. Depreciation on the equipment is $6,700 per year. On June 30, the company lends its chief financial officer

$47,000; principal and interest at 7% are due in one year. On October 1, the company receives $14,800 from a customer for a one-year property insurance policy. Deferred Revenue is credited. Required: For each item, record the necessary adjusting entry for the company at its year-end of December 31. No adjusting entries were made during the year. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)

Answer 1

	General Journal	Debit	Credit
a	Depreciation expense	6700
	Accumulated depreciation		6700
b	Interest receivable	1645		=47000*7%*6/12
	Interest revenue		1645
c	Deferred revenue	3700		=14800*3/12
	Service revenue		3700
	Effect on net income
a	6700	Higher
b	1645	Lower
c	3700	Lower