P3A-44B (similar to) Speedy Pack\'n Mail completed the following transactions du
ID: 2610564 • Letter: P
Question
P3A-44B (similar to) Speedy Pack'n Mail completed the following transactions during 2016: Requirements xpenses and credits a liability account for uneamed revenues. 1. Joumalize the transactions assuming that Speedy debits an asset account for prepaid expenses and credits a liability account for unearned revenues. Journalize the related adjusting entries at December 31, 2016. Post the journal and adjusting entries to the T-accounts, and show their balances at December 31, 2016. (Ignore the Cash account.) Repeat Requirements 1-3. This time debit an expense account for prepaid expenses and credit a revenue account for unearned revenues Compare the account balances in Requirements 3 and 4. They should be equal. 2. 3. 4. 5. Print Done Nov. 1Paid $7,200 store rent covering the six-month period ending April 30, 2017 Nov. 1 Paid $6,000 insurance covering the four-month period ending February 28, 2017. Dec. 1Collected $3,200 cash in advance from customers. The service revenue will be earned $800 monthly over the four-month period ending March 31, 2017 Collected $6,000 cash in advance from customers. The service revenue will be earned $1,200 monthly over the five-month period ending April 30, 2017 Dec. 1Explanation / Answer
Journal entries
requirement -3
ledger accounts
requirement-1
date
explanation
debit
credit
prepaid rent
1-
1-Nov
prepaid rent
7200
cash
7200
rent expense
1200
cash
7200
balance
6000
2-
1-Nov
prepaid insurance
6000
prepaid insurance
cash
6000
cash
6000
insurance expense
3000
3-
1-Dec
cash
3200
unearned revenue
unearned revenue
3200
earned revenue
800
cash
3200
earned revenue
1200
cash
6000
4-
1-Dec
cash
6000
balance
7200
unearned revenue
6000
rent expense
requirement-2
Adjustment entries
prepaid rent
1200
balance
1200
date
explanation
debit
credit
31-Dec
rent expense
1200
insurance expense
prepaid rent
1200
prepaid insurance
3000
balance
3000
31-Dec
insurance expense
3000
earned revenue
prepaid insurance
3000
balance
2000
unearned revenue
800
unearned revenue
1200
31-Dec
unearned revenue
800
earned revenue
800
31-Dec
unearned revenue
1200
earned revenue
1200
requirement-4
date
explanation
debit
credit
4-
1-Nov
rent expense
7200
ledger accounts
cash
7200
prepaid rent
rent expense
1200
balance
1200
1-Nov
insurance expense
6000
cash
6000
prepaid insurance
1-Dec
cash
3200
insurance expense
3000
balance
3000
earned revenue
3200
unearned revenue
1-Dec
cash
6000
balance
2000
earned revenue
800
earned revenue
6000
earned revenue
1200
adjustment entries
date
explanation
debit
credit
rent expense
31-Dec
prepaid rent
1200
cash
7200
prepaid rent
1200
rent expense
1200
balance
6000
insurance expense
31-Dec
prepaid insurance
3000
cash
6000
prepaid insurance
3000
insurance expense
3000
balance
3000
earned revenue
31-Dec
earned revenue
800
unearned revenue
800
cash
3200
unearned revenue
800
unearned revenue
1200
unearned revenue
6000
balance
7200
31-Dec
earned revenue
1200
unearned revenue
1200
requirement-5
Balance
Balance as per requirement
balance as per requirement 4
rent expense
1200
6000
insurance expense
3000
3000
earned revenue
2000
7200
unearned revenue
7200
2000
prepaid rent
6000
1200
prepaid insurance
3000
3000
Journal entries
requirement -3
ledger accounts
requirement-1
date
explanation
debit
credit
prepaid rent
1-
1-Nov
prepaid rent
7200
cash
7200
rent expense
1200
cash
7200
balance
6000
2-
1-Nov
prepaid insurance
6000
prepaid insurance
cash
6000
cash
6000
insurance expense
3000
3-
1-Dec
cash
3200
unearned revenue
unearned revenue
3200
earned revenue
800
cash
3200
earned revenue
1200
cash
6000
4-
1-Dec
cash
6000
balance
7200
unearned revenue
6000
rent expense
requirement-2
Adjustment entries
prepaid rent
1200
balance
1200
date
explanation
debit
credit
31-Dec
rent expense
1200
insurance expense
prepaid rent
1200
prepaid insurance
3000
balance
3000
31-Dec
insurance expense
3000
earned revenue
prepaid insurance
3000
balance
2000
unearned revenue
800
unearned revenue
1200
31-Dec
unearned revenue
800
earned revenue
800
31-Dec
unearned revenue
1200
earned revenue
1200
requirement-4
date
explanation
debit
credit
4-
1-Nov
rent expense
7200
ledger accounts
cash
7200
prepaid rent
rent expense
1200
balance
1200
1-Nov
insurance expense
6000
cash
6000
prepaid insurance
1-Dec
cash
3200
insurance expense
3000
balance
3000
earned revenue
3200
unearned revenue
1-Dec
cash
6000
balance
2000
earned revenue
800
earned revenue
6000
earned revenue
1200
adjustment entries
date
explanation
debit
credit
rent expense
31-Dec
prepaid rent
1200
cash
7200
prepaid rent
1200
rent expense
1200
balance
6000
insurance expense
31-Dec
prepaid insurance
3000
cash
6000
prepaid insurance
3000
insurance expense
3000
balance
3000
earned revenue
31-Dec
earned revenue
800
unearned revenue
800
cash
3200
unearned revenue
800
unearned revenue
1200
unearned revenue
6000
balance
7200
31-Dec
earned revenue
1200
unearned revenue
1200
requirement-5
Balance
Balance as per requirement
balance as per requirement 4
rent expense
1200
6000
insurance expense
3000
3000
earned revenue
2000
7200
unearned revenue
7200
2000
prepaid rent
6000
1200
prepaid insurance
3000
3000
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