Question

The Blew  Lawn Care Inc. began operations on April 1. At April 30, the trial balance shows the following balances for selected accounts.

                       Prepaid Insurance                       $3,600

                        Equipment                                     28,000

                       Notes Payable                                 20,000

                       Unearned Service Revenue              4,200

                       Service Revenue                                   1,800

Analysis reveals the following additional data.

1. Prepaid insurance is the cost of a 2-year insurance policy, effective April
2. Depreciation on equipment is $500 per month.
3. The note payable is dated April 1, it is a 6-month, 12% note.
4. Seven customers paid for the company’s 6-month lawn service package of $600 starting in April . The company performed services for these customers in April.
5. Lawn services performed for other customers but not recorded at April 30 totaled $1,500.

REQUIRED: PREPARE ADJUSDTING ENTRIES FOR THE MONTH OF APRIL

                    Title                                                     Dr.                                      Cr.

Answer 1

Date	General journal	Debit	Credit
April 30	Insurance expense	150
	Prepaid insurance		150
	( To record insurance expense)
April 30	Deprecation expense	500
	Accumulated depreciation - equipment		500
	( To record depreciation expense)
April 30	Interest expense	200
	Interest payable		200
	( To record interest expense)
April 30	Unearned service revenue	700
	Service revenue		700
	( To record unearned service revenue earned)
April 30	Accounts receivable	1,500
	Service revenue		1,500
	( To record service revenue)

1.

Insurance expense for 2 years = $3,600

Insurance expense for 1 month = 3,600 x 1/24

= $150

3.

Interest payable on April 30 = Note payable x Interest rate x 1/12

= 20,000 x 12% x 1/12

= $200

4.

Service revenue for 6 months = $4,200

Service revenue for 1 month = 4,200 x 1/6

= $700

Kindly comment if you need further assistance. Thanks‼!