Question

P4-2 (Algo) Recording Adjusting Entries L04-1 [The following information applies to the questions displayed below. All of the current year's entries for Zimmerman Company have been made, except the following adjusting entries. The company's annual accounting year ends on December 31. a. On September 1 of the current year, Zimmerman collected six months' rent of $8,640 on storage space. At that date, Zimmerman debited Cash and credited Unearned Rent Revenue for $8,640. b. On October 1 of the current year, the company borrowed $19,200 from a local bank and signed a one-year, 11 percent note for that amount. The principal and interest are payable on the maturity date. c. Depreciation of $2,500 must be recognized on a service truck purchased in July of the current year at a cost of $24,000. d. Cash of $4,200 was collected on November of the current year, for services to be rendered evenly over the next year beginning on November 1 of the current year. Unearned Service Revenue was credited when the cash was received e. On November 1 of the current year, Zimmerman paid a one-year premium for property insurance, $9,120, for coverage starting on that date. Cash was credited and Prepaid Insurance was debited for this amount. f. The company earned service revenue of $3,700 on a special job that was completed December 29 of the current year. Collection will be made during January of the next year. No entry has been recorded. g. At December 31 of the current year, wages earned by employees totaled $15,000. The employees will be paid on the next payroll date in January of the next year. h. On December 31 of the current year, the company estimated it owed $510 for this year's property taxes on land. The tax will be paid when the bill is received in January of next year.

Answer 1

No.	Transaction	General Journal	Debit	Credit
1	a.	Unearned rent revenue	$5,760
		Rent revenue		$5,760
		( To record unearned rent revenue earned)
2.	b.	Interest expense	$528
		Interest payable		$528
		( To record interest expense)
3.	c.	Depreciation expense	$2,500
		Accumulated depreciation- Truck		$2,500
		( To record depreciation expense)
4.	d.	Unearned service revenue	$700
		Service revenue		$700
		( To record unearned service revenue earned)
5.	e.	Insurance expense	$1,520
		Prepaid insurance		$1,520
		( To record insurance expense)
6.	f.	Accounts receivable	$3,700
		Service revenue		$3,700
		( To record service revenue)
7.	g.	Wages expense	$15,000
		Wages payable		$15,000
		( To record wages expense)
8.	h.	Property tax expense	$510
		Property tax payable		$510
		( To record property tax expense)

a.

Rent revenue for 6 months = $8,640

Rent revenue for 4 months (from September to December) = 8,640 x 4/6

= $5,760

b.

Interest payable on December 31 = Note payable x Interest rate x time period/12

= 19,200 x 11% x 3/12

= $528

d.

Service revenue for 1 year = $4,200

Service revenue for 2 months (November and December ) = 4,200 x 2/12

= $700

e.

Insurance expense for 1 year = $9,120

Insurance expense for 2 months (November and December) = 9,120 x 2/12

= $1,520

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