Question

Instructions Main Squeeze is completing the accounting process for the year just ended December 31, 2021. The transactions during 2021 have been journalized and posted. The following data with respect to adjusting entries is available; a. Main squeeze entered into a contract to provide fresh lemonade to a local bar every week from October 1 until April 30 for $200/ week all of which was prepaid. (assume 4 weeks per month) b. On July 1st Purchased a 2-year insurance policy for $600 c. Estimated depreciation of the car for the year to be $800 d. Borrowed $5,400 in April to purchase the cart, annual installments of $1,080 are due each April. plus 10% interest on the opening balance. e. In April, estimated the useful life of the lemonade stand/trailer to be five seasons f. At December 31, Main Squeeze had $340 worth of supplies and inventory on hand, purchased $3,700 worth during the year, and began with $0.

Answer 1

Event	Date	Accounts title	Debit	Credit
a	Dec 31, 2021	Unearned sales Revenue	$       2,400
		Sales revenue		$       2,400
		(To record sales revenue on which cash already received.) (Oct to Dec = 3 months = 3*4 = 12 weeks) (200*12)
b	Dec 31, 2021	Insurance expense	$           150
		Prepaid insurance		$          150
		(To record expired insurance.) (July to Dec = 6 months) (2 years = 24 months) (600*6/24)
c	Dec 31, 2021	Depreciation expense	$           800
		Accumulated depreciation - equipment		$          800
		(To record depreciation expense on car.)
d	Dec 31, 2021	Interest expense	$           360
		Interest payable		$          360
		(To record accrued interest expense.) (Borrowed on April 30) (May to Dec = 8) (5400*10%*8/12)
e	Dec 31, 2021	Depreciation expense	$XXX
		Accumulated depreciation - lamonade stand		$XXX
		(To record depreciation expense on lamonade stand.) ((cost of lamonade - Salvage value)/useful life of 5 season)
f	Dec 31, 2021	Supplies expense	$       3,360
		Supplies		$       3,360
		(To record supply used during the period.) (3700-340)