The following information is provided for adjustments prior to closing the books
ID: 2377485 • Letter: T
Question
The following information is provided for adjustments prior to closing the books. Lopez and Knepp ask you to enter the adjustments into the spreadsheet, in the two columns to the right of the unadjusted trial balance. (CM2 uses a perpetual inventory system.)
(IM STUCK ON HOW TO THE THE JURNAL ENTRIES, I NEED HELP ON HOW TO DO THE PROPPER CORRECT JURNAL ENTRIES, AFTER THAT I CAN CONTINUE)
1. Wages earned by employees during December and to be paid in January are $33,875; associated payroll taxes on these wages are $2,710.
2. On July 1, a client paid CM2 $205,720 in advance for a year of consulting services.
3. You discover that a product sale was made and recorded in December for $128,600; the product had not yet been shipped. The cost of the product was $68,742.
4. Bad debt expense has been calculated to be $17,508 but has not yet been recorded.
5. The Prepaid Expense account has a balance of $22,774. This balance includes $11,200 for a two-year insurance policy purchased on January 1, 2009.
6. Depreciation expense for the year is $82,620.
7. Interest expense accrued on its long-term liabilities is $7,765.
8. On December 15, CM2 declared a dividend of $110,000, to be paid on January 15, 2010.
9. Income tax expense is $201,109.
Explanation / Answer
1. Wages earned by employees during December and to be paid in January are $33,875; associated payroll taxes on these wages are $2,710.
Wages Dr 33875, Taxes Payable Cr 2710, Wages Payable Cr 31165
2. On July 1, a client paid CM2 $205,720 in advance for a year of consulting services. In addition, of the beginning balance in Unearned Revenue, 60% of the work has now been completed.
On july 1, Cash dr 205720, Unearned revenue in advance cr 205720
On dec31, Unearned Revenue in advance dr 102860,revenue for the year 102860
3. You discover that a product sale was made on account and recorded in December for $128,600; the product had not yet been shipped. The cost of the product was $68,742.
Stock of customers in hand should not be recorded in books since the ownership is transferred on account. Thus no entry for stock appropriation.
4. Bad debt expense is estimated to be 7% of ending Accounts Receivable. (Round to the nearest whole dollar.)
Bad debt Dr (amount not given), accounts receivable cr (amount not given)
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