Question

Cactus Company's annual accounting year ends on June 30. Assume it is June 30, and all of the entries except the following adjusting journal entries have been made: a. The company earned service revenue of $2,600 on a special job that was completed June 29. Collection will be made during July; no entry has been recorded. b. On March 31, Cactus paid a six-month premium for property insurance in the amount of $3,320 for coverage starting on that date. Cash was credited and Prepaid Insurance was debited for this amount c. At June 30, wages of $960 were earned by employees but not yet paid. The employees will be paid on the next payroll date, which is July 15. d. On June 1, Cactus collected two months' revenue of $510. At that date, Cactus debited Cash and credited Deferred Revenue for $510. One-half of it has now been earned but not yet recorded. e. Depreciation of $1,560 must be recognized on equipment purchased on July 1 of the previous year. f. Cash of $4,560 was collected on May 1 for services to be rendered evenly over the next year beginning on May 1 Deferred Revenue was credited when the cash was received. Two months of this performance obligation have now been fulfilled but not yet recorded g. The company owes interest of $660 on a bank loan taken out on February 1. The interest will be paid when the loan is repaid next year on January 31. n. The income after all adjustments except income taxes was $26,000. The company's federal income tax rate is 25%

Answer 1

Adjusting entries
S.no.	Accounts title and explanation			Debit $	Credit $
a.	Accounts receivable				2,600
	Service revenue					2,600
	(for revenue earned)
b.	Insurance expenses (3,320*3/6)			1660
	Prepaid insurance					1660
	(for insurance premium expired)
c.	Salaries and wages expense			960
	Salaries and wages payable				960
	(for wages due and unpaid)
d.	Deferred revenue				255
	Service revenue					255
	(for revenue earned)
e.	Depreciation expense			1560
	Accumulated dep-Equipment				1560
	(for depreciation expense)
f.	Deferred revenue				760
	Service revenue (4560*2/12)				760
	(for revenue earned)
g.	Interest expense (660*5/12)			275
	Interest payable					275
	(for interest expense due)
h.	Income tax expense				1500
	Income tax payable (6000*25%)			1500
	(for income tax payable)