Drew Carey Company has the following balances in selected accounts on December 3

Question

Drew Carey Company has the following balances in selected accounts on December 31,2010. Accounts Receivable $ 0
Accumulated Depreciation - Equipment 0
Equipment 7000
Interest Payable 0
Notes Payable 10,000
Prepaid Insurance 2,100
Salaries Payable 0
Supplies 2,450
Unearned Consulting Revenue 40,000
All the accounts have normal balances. The information below has been gathered at December31,2010. 1. Drew Carey Company borrowed $10,000 by signing a 12%, one year note on September 1, 2010. 2. A count of supplies on December 31, 2010, indicates that supplies of $800 are on hand. 3. Depreciation on the equipment for 2010 is $1,000. 4. Drew Carey Company paid $2,100 for 12 months of insurance coverage on June 1, 2010. 5. On December 1, 2010, Drew Carey collected $40,000 for consulting services to be performed from December 1, 2010, through March 31, 2010.
6. Drew Carey performed consulting services for a client in December 2010. The client will be billed $4,200. 7. Drew Carey Company pays its employees total salaries of $9,000 every Monday for the preceding 5-day week (Monday through Friday). On Monday, December 29, employees were paid for the week ending December 26. All employees worked the last 3 days of 2010.
Instructions: Prepare adjusting entries for the seven items described above.

Explanation / Answer

Actual entries: Particulars Dr Cr 1 Cash $10,000 Notes payable $10,000 (Cash received with issue of notes payable) Interest $400 Interest payable $400 (4 months interest has to pay 10000*12%*4/12) 2 Depreciation 1000 Accumulated depreciation 1000 (Depreciation has to charge on equipment) 3 Insurance expense (7Months) $1,225 Prepaid insurance expense (5Months) $875 Cash $2,100 (Insurance expense paid for 12 Months this year 7 months, next year 5 months) 4 Cash $40,000 Consulting revenue (for December) $10,000 Unearned Consulting revenue (Jan - Mar) $30,000 (Consulting revenue received for 4 months one month for this year 3 months for next year) 5 Accounts receivable $4,200 Consulting revenue $4,200 (Consulting revenue has to receive) 6 Salaries $5,400 Salaries payable $5,400 (3 days salary has to pay 9000 * 3/5) Adjusting/ rectifing entries: 1 Interest $400 Interest payable $400 (4 months interest has to pay 10000*12%*4/12) 2 Supplies expenses $1,650 Supplies $1,650 (Being supplies are over stayted) 3 Depreciation 1000 Accumulated depreciation 1000 (Depreciation has to charge on equipment) 4 Insurance expenses $1,225 Prepaid insurance expense $1,225 (Totally recorded for next year) 5 Unearned Consulting revenue $10,000 Consulting revenue (for December) $10,000 (Revenue recorded totally for next year) 6 Accounts receivable $4,200 Consulting revenue $4,200 (Consulting revenue has to receive) 7 Salaries $5,400 Salaries payable $5,400 (3 days salary has to pay 9000 * 3/5)

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.