Yousef Company\'s annual accounting year ends on 12/31. It is 12/31/14 and all o
ID: 2346131 • Letter: Y
Question
Yousef Company's annual accounting year ends on 12/31. It is 12/31/14 and all of the 2014 entries except the following adjusting entries have been made:a. On 9/1/2014 , Yousef collected 6 months rent of $16,800 on storage space. At that date, Yousef debited Cash and credited Unearned Rent revenue for $16,800
b. On 10/1/2014 the company borrowed $36K from a local bank and signed a 12% note for that amount. The principal and interest are payable on the maturity date, 9/30/15.
c. Depriciation of $5K must be recognized on a service truck purchased on 7/1/2014 at a cost of $30K
d. Cash of $6K was collected on 11/1/14 for services to be rendered evenly over the next year beginning on 11/1. Unearned Service revenue was credited when the cash was received.
e. On 11/1/14 Yousef paid a 1 year premium for property insurance, $18K for coverage starting on that date. Cash was credited and prepaid insurance was debited for this amount.
f. The company earned service revenue of $8K on a special job that was completed on 12/29/14. Collection will be made during jan 2015. No entry has been recorded.
g. At 12/31/14 wages earned by employees totaled $28K. The employees will be paid on the next payroll date, 1/15/15.
h. On 12/31/14, the company estimated it owed $1K for 2014 property taxes on land. The tax will be paid when the bill is received in jan 2015.
Questions:
1) Indicate whether each transaction relates to a deferred revenue, deferred expense, accrued revenue, or accrued expense.
2) Give the adjusting entry required for each transaction at 12/13/14.
Explanation / Answer
1. Deferred revenue DR Unearned revenue 11,200 CR Service revenue 11,200 2. Accrued expense DR Interest Expense 1,080 CR Accrued Interest 1,080 3. Deferred expense DR Depreciation expense 5,000 CR Accumulated depreciation 5,000 4. Deferred revenue DR Unearned service revenue 1,000 CR Service revenue 1,000 5. Deferred expense DR Insurance expense 3,000 CR Prepaid insurance 3,000 6. Accrued revenue DR Accounts receivable 8,000 CR Service Revenue 8,000 7. Accrue expense DR Wage Expense 28,000 CR Wages payable 28,000 8. Accrued expenses DR Property tax expense 1,000 CR Accrued expenses 1,000
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