SECTION III Selected transactions of the Kimball Publishing Company during the y

Question

SECTION III Selected transactions of the Kimball Publishing Company during the year 2017 follow Apr. 1 Received $18,900 representing rent in advance for the use of extra office space for the period April 1, 2017 to March 31, 2018. Rent Revenue was credited for $18,900. Aug. 31 Paid a $5,280 premium for a two-year fire insurance policy beginning on September 1, 2017. Insurance Expense was debited for $5,280 Nov. 1 Kimball borrowed $150,000 on a 5-year annually 3% note. Interest is payable semi- 55% of$120,000 collected for magazine subscriptions during2017 applies to the years 2018 and 2019. Unearned Revenue was originally credited for $120,000 Dec. 31 The Allowance for Doubtful Accounts is estimated to be 2% of sales. Sales for 2017 were $4.5 million. Dec. 31 Instructions: As of December 31, 2017 provide the appropriate adjusting entries for Kimball, Inc

Explanation / Answer

Adjusting Entries Date Account titles & Explanations Debit Credit 31-Dec Rent revenue 4725 unearned rent revenue 4,725 (18900/12)*3 31-Dec prepaid insurance 4400 insurance expense 4,400 (5,280/24)*20 31-Dec interest expense 750 interest payable 750 (150,000*3%*2/12) 31-Dec unearned revenue 54000 revenue earned 54,000 (120,000*45%) 31-Dec Bad debts expense 90000 Allowance for doubtful accounts 90,000 ($4.5 m*2%)

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