4. (5 points) Complete the adjusting journal entries given the information below

Question

4. (5 points) Complete the adjusting journal entries given the information below A. On 12/1/XX, Timeline purchased $500 of supplies. When they purchased the supplies, they did the following entry: Debit Credit Supplies $500 Cash $500 At the end of the year, there were $280 of supplies remaining on hand. Prepare the adjusting journal entry as of 12/31/XX. Debit Credit B. On 10/1/XX, Timeline made a payment of $6000 to pay rent for the next 6 months. When making the payment, they did the following entry: Debit Credit Prepaid Rent 6,000 Cash 6,000 Prepare the adjusting journal entry as of 12/31/XX. C. On 8/1/XX, Timeline received a payment of $12,000 for services to be performed over the next 6 months. When receiving the payment, they did the following entry: Debit Credit Cash 12,000 Unearned Service Revenue 12,000 Prepare the adjusting journal entry as of 12/31/XX D. On 8/1/XX, Timeline accepted a $5000 6% note from a customer as payment. The note plus interest will be paid on 3/31 of the following year. No interest has been recorded. Prepare the adjusting journal entry as of 12/31/XX E. On 6/1/XX Timeline purchased a vehicle for $15,000. Managers estimate the useful life of the vehicle to be 3 years. The depreciation for the year has not been recorded. Prepare the adjusting journal entry as of 12/31/XX

Explanation / Answer

4. (5 points) Complete the adjusting journal entries given the information below A. On 12/1/XX, Timeline purchased $500 of supplies. When they purchased the supplies, they did the following entry: Debit Credit Supplies $500 Cash $500 At the end of the year, there were $280 of supplies remaining on hand. Prepare the adjusting journal entry as of 12/31/XX. Debit: Supplies expense 220 Credit: Supplies 220 (since there were 280 on hand, they used 500-280 = 220) B. On 10/1/XX, Timeline made a payment of $6000 to pay rent for the next 6 months. When making the payment, they did the following entry: Debit Credit Prepaid Rent 6,000 Cash 6,000 Prepare the adjusting journal entry as of 12/31/XX. Debit: Rent expense 3000 Credit: Prepaid rent 3000 (6,000/6 = 1,000 per month, Oct – Dec = 3 months, 3*1000 = 3000) C. On 8/1/XX, Timeline received a payment of $12,000 for services to be performed over the next 6 months. When receiving the payment, they did the following entry: Debit Credit Cash 12,000 Unearned Service Revenue 12,000 Prepare the adjusting journal entry as of 12/31/XX Debit: Unearned Revenue 10,000 Credit: Revenue 10,000 (12,000/6 = 2,000 per month, Aug – Dec = 5 months, 5*2,000 = 10,000) D. On 8/1/XX, Timeline accepted a $5000 6% note from a customer as payment. The note plus interest will be paid on 3/31 of the following year. No interest has been recorded. Prepare the adjusting journal entry as of 12/31/XX Debit: Interest expense 125 Credit: Interest payable 125 (5,000*.06*5 months/12 months = 125) E. On 6/1/XX Timeline purchased a vehicle for $15,000. Managers estimate the useful life of the vehicle to be 3 years. The depreciation for the year has not been recorded. Prepare the adjusting journal entry as of 12/31/XX Debit: Depreciation expense 2,916.67 Credit: Accumulated depreciation 2,916.67 (Assuming straight line depreciation, no salvage value, 15,000/3 = 5,000 per year. 5,000*7 months/12 months = 2916.67)

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