(L.OBJ. 2,3) Preparing adjusting and closing entries [20 min] Link Back to Chapter 3 (A...

(L.OBJ. 2,3) Preparing adjusting and closing entries [20 min]

Link Back to Chapter 3 (Adjusting Entries). Emerson St. Paul Book Shop’s accounting records include the following account balances:

During 2011, the business recorded the following:

a. Prepaid annual rent of $7,000

b. Made the year-end adjustment to record rent expense of $6,000 for the year

c. Collected $4,100 cash in advance for service revenue to be earned later

d. Made the year-end adjustment to record the earning of $4,500 service revenue that had been collected in advance

Requirements

1. Set up T-accounts for Prepaid rent, Rent expense, Unearned service revenue, and Service revenue. Insert beginning and ending balances for Prepaid rent and Unearned service revenue.

2. Journalize the previous adjusting entries a—d, and post to the accounts. Explanations are not required.

3. What is the balance in Service revenue after adjusting?

4. What is the balance in Rent expense after adjusting?