The question is: In the journal provided, prepare year- end adjustments for the following situations. Omit explanations.
a. accrued interest on notes receivable is $105
b. of the $12,000 received in advance of earning a service, one third was still unearned by year end.
c. three years rent, totaling $36,000, was paid in advance at the beginning of the year.
d. services totaling $5300 had been performed but not yet billed.
e. depreciation on trucks totaled $3400 for the year
f. supplies available for use totaled $690 however, by year end, only $100 remained
g. payroll for the 5 day work week, to be paid on friday, is $30,000. Year end is on a monday
h. estimated federal income taxes were $4,160
To prepare year-end adjustments in the journal, follow these steps:
Step 1: Accrued interest on notes receivable is $105.
Interest Expense $105
Interest Payable $105
Step 2: One third of the $12,000 received in advance of earning a service was still unearned by year-end.
Unearned Service Revenue $4,000
Service Revenue $4,000
Step 3: Three years rent, totaling $36,000, was paid in advance at the beginning of the year.
Prepaid Rent $36,000
Rent Expense $12,000
Step 4: Services totaling $5,300 had been performed but not yet billed.
Accounts Receivable $5,300
Service Revenue $5,300
Step 5: Depreciation on trucks totaled $3,400 for the year.
Depreciation Expense $3,400
Accumulated Depreciation $3,400
Step 6: Supplies available for use totaled $690; however, by year-end, only $100 remained.
Supplies Expense $590
Supplies $590
Step 7: Payroll for the 5-day workweek, to be paid on Friday, is $30,000. Year-end is on Monday.
Salaries Expense $6,000
Salaries Payable $6,000
Step 8: Estimated federal income taxes were $4,160.
Income Tax Expense $4,160
Income Tax Payable $4,160
Please note that the steps provided omit explanations as requested.
To prepare the year-end adjustments for the given situations, you will need to follow these steps:
a. Accrued interest on notes receivable is $105:
- Debit: Interest Receivable ($105)
- Credit: Interest Income ($105)
b. Of the $12,000 received in advance for earning a service, one-third was still unearned by year-end:
- Debit: Unearned Revenue ($4,000)
- Credit: Service Revenue ($4,000)
c. Three years' rent totaling $36,000 was paid in advance at the beginning of the year:
- Debit: Prepaid Rent ($36,000)
- Credit: Rent Expense ($36,000)
d. Services totaling $5,300 had been performed but not yet billed:
- Debit: Accounts Receivable ($5,300)
- Credit: Service Revenue ($5,300)
e. Depreciation on trucks totaled $3,400 for the year:
- Debit: Depreciation Expense ($3,400)
- Credit: Accumulated Depreciation - Trucks ($3,400)
f. Supplies available for use totaled $690; however, by year-end, only $100 remained:
- Debit: Supplies Expense ($590)
- Credit: Supplies ($590)
g. Payroll for the 5-day workweek, to be paid on Friday, is $30,000. Year-end is on a Monday:
Since year-end is on a Monday and the payroll is for the full 5-day workweek, no adjustments are required for this situation.
h. Estimated federal income taxes were $4,160:
- Debit: Income Tax Expense ($4,160)
- Credit: Income Tax Payable ($4,160)
These adjustments will ensure that the financial statements reflect the correct balances and comply with accounting principles. Always consult with a professional accountant for specific guidance tailored to your situation.