Question

Pina Colada Corp. has the following balances in selected accounts on December 31, 2020. Service Revenue Insurance Expense Supplies Expense $43.200 5,580 2.800 All the accounts have normal balances. Pina Colada Corp. debits prepayments to expense accounts when paid, and credits unearned revenues to revenue accounts when received. The following information below has been gathered at December 31, 2020. 1. 2 Pina Colada Corp. paid $5.580 for 12 months of insurance coverage on June 1, 2020. On December 1, 2020, Pina Colada Corp.collected $43,200 for consulting services to be performed from December 1, 2020, through March 31, 2021. A count of supplies on December 31, 2020, indicates that supplies of $500 are on hand. 3. Prepare the adjusting entries needed at December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually)

Answer 1

Adjusting entries: A No. 1 D Debit $2,325 E Credit $2,325 1 2 3 4 5 6 7 B с Date Account Titles and Explanation 31-Dec-20 Prepaid insurance Insurance expense 31-Dec-20 Service revenue Unearned service revenue 31-Dec-20 Supplies Supplies expense 2 $32,400 $32,400 3 $500 $500 Calculations are shown below: D Debit 1=(5580/12)*5 E Credit =D2 A B С 1 No. Date Account Titles and Explanation 2 1 44196 Prepaid insurance 3 Insurance expense 4 2 44196 Service revenue Unearned service reve 6 3 44196 Supplies Supplies expense =(43200/4)*3 evenue =D4 500 7 =D6