1. On July 1, 2014, Seng Co. pays $17,100 to Nance Insurance Co. for a 1-year in
ID: 2480665 • Letter: 1
Question
1. On July 1, 2014, Seng Co. pays $17,100 to Nance Insurance Co. for a 1-year insurance contract. Both companies have fiscal years ending December 31.
-Journalize the entry on July 1 and the adjusting entry on December 31 for Nance Insurance Co. Nance uses the accounts Unearned Service Revenue and Service Revenue.
-Post the entry on July 1 and the adjusting entry on December 31 for Nance Insurance Co.
2. The bookkeeper for Beltran Company asks you to prepare the following accrual adjusting entries at December 31.
Salaries of $779 earned by employees have not been recorded.
Determine the company’s net earnings on an accrual basis for 2014.
* for this answer I got 35,410 - can you explain why its wrong?
1. On July 1, 2014, Seng Co. pays $17,100 to Nance Insurance Co. for a 1-year insurance contract. Both companies have fiscal years ending December 31.
-Journalize the entry on July 1 and the adjusting entry on December 31 for Nance Insurance Co. Nance uses the accounts Unearned Service Revenue and Service Revenue.
-Post the entry on July 1 and the adjusting entry on December 31 for Nance Insurance Co.
2. The bookkeeper for Beltran Company asks you to prepare the following accrual adjusting entries at December 31.
(a) Interest on notes payable of $452 is accrued. (b) Services performed but unbilled totals $1,848. (c)Salaries of $779 earned by employees have not been recorded.
Explanation / Answer
Solution:
1. In the books of Nance Co.
July1, 2014 Seng Co $17,100
Unearned Service Revenue 17,100
(Being Service revenue received in advance for a 1 year term.)
Dec31, 2014 Unearned Service Revenue $8,550
Service Revenue 8,550
(Being services rendered for 6 months hence the same recorded as service revenue)
2.
(a) Interest on notes payable $452
Interest expense payable 452
On the date of payment following entry will be made:
Interest expense payable $452
Bank 452
(b) Accounts Receivable $1,848
Services performed 1,848
(c) Salary expense $779
Salary payable 779
(3) Cash earnings for 2014: $34,190
Add: Accounts Receivable $1020
Unpaid Wages 30 1,050
Less: Supplies on hand 370
Unpaid expenses 540 (910)
Net earnings on accrual basis 34,330
Working notes:
1. Accounts receivable $3,440 - $2,420 = $1,020
2. Supplies on hand $1,620 - $1,250 = $370
3. Unpaid wages $2,460 - $2,430 = $30
4. Unpaid exp $ 1,790 - 1,250 = $540
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