Jordan Company\'s annual accounting year ends on December 31. It is now December
ID: 2334996 • Letter: J
Question
Jordan Company's annual accounting year ends on December 31. It is now December 31, 2018, and all of the 2018 entries have been made except for the following: a. The company owes interest of $900 on a bank loan. The interest will be paid when the loan is repaid on September 30, 2019. No interest has been recorded b. On September 1, 2018, Jordan collected six months' rent of $7,800 on storage space. At that date, Jordan debited Cash and credited Deferred Revenue for $7,800. c. The company earned service revenue of $4,300 on a special job that was completed December 29, 2018. Collection will be made during January 2019. No entry has been recorded. d. On November 1, 2018, Jordan paid a one-year premium for property insurance of $5,400, for coverage starting on that date. Cash was credited and Prepaid Insurance was debited for this amount. e. At December 31, 2018, wages earned by employees but not yet paid totaled $2,100. The employees will be paid on the next payroll date, January 15, 2019. f Depreciation of $2,000 must be recognized on a service truck purchased this year g. The income after all adjustments other than income taxes was $40,000. The company's income tax rate is 15%. Compute and record income tax expense. Required: Determine the accounting equation effects of each required adjustment. TIP: The first transaction is done for you as an example. Enter any decreases to Assets, Liabilities, or Stockholders' Equity with a minus sign.)Explanation / Answer
Solution:
Transaction Assets = Liabilities + Stockholders' Equity Particulars Amount Particulars Amount Particulars Amount a. Interest Payable 900 Interest Expense -900 b. Deferred Revenue (7800*4/6) -5200 Rent Revenue 5200 c. Accounts Receivable 4300 Service Revenue 4300 d. Prepaid Insurance (5400*2/12) -900 Insuance Expenses -900 e. Salaries and Wages Payable 2100 Salaries and Wages Expense -2100 f. Accumulated Depreciation 2000 Depreciation Expense -2000 g. Income Tax Payable (40000*15%) 6000 Income Tax Expense -6000Related Questions
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