The Adjusting Process

Question :At the beginning of the year, office supplies of \(1,200 were on hand. During the year, Tempo Air Conditioning Service paid \)4,000 for more office supplies. At the end of the year, Tempo has $800 of office supplies on hand. Requirements 1. Record the adjusting entry assuming that Tempo records the purchase of office supplies by initially debiting an asset account. Post the adjusting entry to the Office Supplies and Supplies Expense T-accounts. Make sure to include the beginning balance and purchase of office supplies in the Office Supplies T-account. 2. Record the adjusting entry assuming that Tempo records the purchase of office supplies by initially debiting an expense account. Post the adjusting entry to the Office Supplies and Supplies Expense T-accounts. Make sure to include the beginning balance in the Office Supplies T-account and the purchase of office supplies in the Supplies Expense T-account. 3. Compare the ending balances of the T-accounts under both approaches. Are they the same?

Question :At the beginning of the year, Modish Advertising owed customers \(2,100 for unearned revenue collected in advance. During the year, Modish received advance cash receipts of \)6,100 and earned \(20,000 of service revenue (exclusive of any amount earned from advance payments). At year-end, the liability for unearned revenue is \)3,100 and unadjusted service revenue is $20,000. Requirements 1. Record the adjusting entry assuming that Modish records the cash receipt of unearned revenue by initially crediting a liability account. Post the adjusting entry to the Unearned Revenue and Service Revenue T-accounts. Make sure to include the beginning balance and additional unearned revenue in the Unearned Revenue T-account. 2. Record the adjusting entry assuming that Modish records the cash receipt of unearned revenue by initially crediting a revenue account. Post the adjusting entry to the Unearned Revenue and Service Revenue T-accounts. Make sure to include the beginning balance in the Unearned Revenue T-account and the additional unearned revenue in the Service Revenue T-account. 3. Compare the ending balances of the T-accounts under both approaches. Are they the same?

Question :At the beginning of the year, Modish Advertising owed customers \(2,100 for unearned revenue collected in advance. During the year, Modish received advance cash receipts of \)6,100 and earned \(20,000 of service revenue (exclusive of any amount earned from advance payments). At year-end, the liability for unearned revenue is \)3,100 and unadjusted service revenue is $20,000. Requirements 1. Record the adjusting entry assuming that Modish records the cash receipt of unearned revenue by initially crediting a liability account. Post the adjusting entry to the Unearned Revenue and Service Revenue T-accounts. Make sure to include the beginning balance and additional unearned revenue in the Unearned Revenue T-account. 2. Record the adjusting entry assuming that Modish records the cash receipt of unearned revenue by initially crediting a revenue account. Post the adjusting entry to the Unearned Revenue and Service Revenue T-accounts. Make sure to include the beginning balance in the Unearned Revenue T-account and the additional unearned revenue in the Service Revenue T-account. 3. Compare the ending balances of the T-accounts under both approaches. Are they the same?

Question :At the beginning of the year, Modish Advertising owed customers \(2,100 for unearned revenue collected in advance. During the year, Modish received advance cash receipts of \)6,100 and earned \(20,000 of service revenue (exclusive of any amount earned from advance payments). At year-end, the liability for unearned revenue is \)3,100 and unadjusted service revenue is $20,000. Requirements 1. Record the adjusting entry assuming that Modish records the cash receipt of unearned revenue by initially crediting a liability account. Post the adjusting entry to the Unearned Revenue and Service Revenue T-accounts. Make sure to include the beginning balance and additional unearned revenue in the Unearned Revenue T-account. 2. Record the adjusting entry assuming that Modish records the cash receipt of unearned revenue by initially crediting a revenue account. Post the adjusting entry to the Unearned Revenue and Service Revenue T-accounts. Make sure to include the beginning balance in the Unearned Revenue T-account and the additional unearned revenue in the Service Revenue T-account. 3. Compare the ending balances of the T-accounts under both approaches. Are they the same?

Question :Laughter Landscaping has collected the following data for the December 31 adjusting entries: a. Each Friday, Laughter pays employees for the current week’s work. The amount of the weekly payroll is \(8,000 for a five-day workweek. This year, December 31 falls on a Tuesday. Laughter will pay its employees on January 3. b. On January 1 of the current year, Laughter purchases an insurance policy that covers two years, \)8,000.c. The beginning balance of Office Supplies was \(4,300. During the year, Laughter purchased office supplies for \)5,600, and at December 31 the office supplies on hand total \(1,500. d. During December, Laughter designed a landscape plan and the client prepaid \)6,500. Laughter recorded this amount as Unearned Revenue. The job will take several months to complete, and Laughter estimates that the company has earned 40% of the total revenue during the current year. e. At December 31, Laughter had earned \(3,000 for landscape services completed for Turnkey Appliances. Turnkey has stated that it will pay Laughter on January 10. f. Depreciation for the current year includes Equipment, \)3,000; and Trucks, \(2,200. g. Laughter has incurred \)250 of interest expense on a $550 interest payment due on January 15. Requirements 1. Journalize the adjusting entry needed on December 31 for each of the previous items affecting Laughter Landscaping. Assume Laughter records adjusting entries only at the end of the year. 2. Journalize the subsequent journal entries for adjusting entries a, d, and g.

Question :Laughter Landscaping has collected the following data for the December 31 adjusting entries: a. Each Friday, Laughter pays employees for the current week’s work. The amount of the weekly payroll is \(8,000 for a five-day workweek. This year, December 31 falls on a Tuesday. Laughter will pay its employees on January 3. b. On January 1 of the current year, Laughter purchases an insurance policy that covers two years, \)8,000.c. The beginning balance of Office Supplies was \(4,300. During the year, Laughter purchased office supplies for \)5,600, and at December 31 the office supplies on hand total \(1,500. d. During December, Laughter designed a landscape plan and the client prepaid \)6,500. Laughter recorded this amount as Unearned Revenue. The job will take several months to complete, and Laughter estimates that the company has earned 40% of the total revenue during the current year. e. At December 31, Laughter had earned \(3,000 for landscape services completed for Turnkey Appliances. Turnkey has stated that it will pay Laughter on January 10. f. Depreciation for the current year includes Equipment, \)3,000; and Trucks, \(2,200. g. Laughter has incurred \)250 of interest expense on a $550 interest payment due on January 15. Requirements 1. Journalize the adjusting entry needed on December 31 for each of the previous items affecting Laughter Landscaping. Assume Laughter records adjusting entries only at the end of the year. 2. Journalize the subsequent journal entries for adjusting entries a, d, and g.

Question :Griffin Fishing Charters has collected the following data for the December 31 adjusting entries: a. The company received its electric bill on December 31 for \(375 but will not pay it until January 5. (Use the Utilities Payable account.) b. Griffin purchased a three-month boat insurance policy on November 1 for \)1,200. Griffin recorded a debit to Prepaid Insurance. c. As of December 31, Griffin had earned \(3,000 of charter revenue that has not been recorded or received. d. Griffin’s fishing boat was purchased on January 1 at a cost of \)33,500. Griffin expects to use the boat for 10 years and that it will have a residual value of \(3,500. Determine annual depreciation assuming the straight-line depreciation method is used. e. On October 1, Griffin received \)9,000 prepayment for a deep-sea fishing charter to take place in December. As of December 31, Griffin has completed the charter. Requirements 1. Journalize the adjusting entries needed on December 31 for Griffin Fishing Charters. Assume Griffin records adjusting entries only at the end of the year. 2. If Griffin had not recorded the adjusting entries, indicate which specific category of accounts on the financial statements would be misstated and if the misstatement is overstated or understated. Use the following table as a guide

Griffin Fishing Charters has collected the following data for the December 31 adjusting entries: a. The company received its electric bill on December 31 for \(375 but will not pay it until January 5. (Use the Utilities Payable account.) b. Griffin purchased a three-month boat insurance policy on November 1 for \)1,200. Griffin recorded a debit to Prepaid Insurance. c. As of December 31, Griffin had earned \(3,000 of charter revenue that has not been recorded or received. d. Griffin’s fishing boat was purchased on January 1 at a cost of \)33,500. Griffin expects to use the boat for 10 years and that it will have a residual value of \(3,500. Determine annual depreciation assuming the straight-line depreciation method is used. e. On October 1, Griffin received \)9,000 prepayment for a deep-sea fishing charter to take place in December. As of December 31, Griffin has completed the charter. Requirements 1. Journalize the adjusting entries needed on December 31 for Griffin Fishing Charters. Assume Griffin records adjusting entries only at the end of the year. 2. If Griffin had not recorded the adjusting entries, indicate which specific category of accounts on the financial statements would be misstated and if the misstatement is overstated or understated. Use the following table as a guide.  

 Griffin Fishing Charters has collected the following data for the December 31 adjusting entries: a. The company received its electric bill on December 31 for \(375 but will not pay it until January 5. (Use the Utilities Payable account.) b. Griffin purchased a three-month boat insurance policy on November 1 for \)1,200. Griffin recorded a debit to Prepaid Insurance. c. As of December 31, Griffin had earned \(3,000 of charter revenue that has not been recorded or received. d. Griffin’s fishing boat was purchased on January 1 at a cost of \)33,500. Griffin expects to use the boat for 10 years and that it will have a residual value of \(3,500. Determine annual depreciation assuming the straight-line depreciation method is used. e. On October 1, Griffin received \)9,000 prepayment for a deep-sea fishing charter to take place in December. As of December 31, Griffin has completed the charter. Requirements 1. Journalize the adjusting entries needed on December 31 for Griffin Fishing Charters. Assume Griffin records adjusting entries only at the end of the year. 2. If Griffin had not recorded the adjusting entries, indicate which specific category of accounts on the financial statements would be misstated and if the misstatement is overstated or understated. Use the following table as a guide.  

Question : The unadjusted trial balance of Anniston Air Purification System at December 31, 2018, and the data needed for the adjustments follow ANNISTON AIR PURIFICATION SYSTEM Unadjusted Trial Balance December 31, 2018 Adjustment data at December 31 follow Account Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Advertising Expense Supplies Expense Total Balance \( 7,600 \) 69,000 \( 69,000 22,000 43,800 3,100 15,300 19,700 2,900 1,800 \) 3,900 2,900 9,900 3,300 1,800 a. On December 15, Anniston contracted to perform services for a client receiving \(3,100 in advance. Anniston recorded this receipt of cash as Unearned Revenue. As of December 31, Anniston has completed \)2,100 of the services. b. Anniston prepaid two months of rent on December 1. (Assume the Prepaid Rent balance as shown on the unadjusted trial balance represents the two months of rent prepaid on December 1.) c. Anniston used \(750 of office supplies. d. Depreciation for the equipment is \)850. e. Anniston received a bill for December’s online advertising, \(1,100. Anniston will not pay the bill until January. (Use Accounts Payable.) f. Anniston pays its employees on Monday for the previous week’s wages. Its employees earn \)3,500 for a five-day workweek. December 31 falls on Wednesday this year. g. On October 1, Anniston agreed to provide a four-month air system check (beginning October 1) for a customer for $3,400. Anniston has completed the system check every month, but payment has not yet been received and no entries have been made.  Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the T-accounts with the unadjusted balances. Post the adjusting entries to the T-accounts. 3. Prepare the adjusted trial balance. 4. How will Anniston Air Purification System use the adjusted trial balance?

Question : The unadjusted trial balance of Anniston Air Purification System at December 31, 2018, and the data needed for the adjustments follow ANNISTON AIR PURIFICATION SYSTEM Unadjusted Trial Balance December 31, 2018 Adjustment data at December 31 follow Account Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Advertising Expense Supplies Expense Total Balance \( 7,600 \) 69,000 \( 69,000 22,000 43,800 3,100 15,300 19,700 2,900 1,800 \) 3,900 2,900 9,900 3,300 1,800 a. On December 15, Anniston contracted to perform services for a client receiving \(3,100 in advance. Anniston recorded this receipt of cash as Unearned Revenue. As of December 31, Anniston has completed \)2,100 of the services. b. Anniston prepaid two months of rent on December 1. (Assume the Prepaid Rent balance as shown on the unadjusted trial balance represents the two months of rent prepaid on December 1.) c. Anniston used \(750 of office supplies. d. Depreciation for the equipment is \)850. e. Anniston received a bill for December’s online advertising, \(1,100. Anniston will not pay the bill until January. (Use Accounts Payable.) f. Anniston pays its employees on Monday for the previous week’s wages. Its employees earn \)3,500 for a five-day workweek. December 31 falls on Wednesday this year. g. On October 1, Anniston agreed to provide a four-month air system check (beginning October 1) for a customer for $3,400. Anniston has completed the system check every month, but payment has not yet been received and no entries have been made.  Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the T-accounts with the unadjusted balances. Post the adjusting entries to the T-accounts. 3. Prepare the adjusted trial balance. 4. How will Anniston Air Purification System use the adjusted trial balance?

Question : The unadjusted trial balance of Anniston Air Purification System at December 31, 2018, and the data needed for the adjustments followANNISTON AIR PURIFICATION SYSTEM Unadjusted Trial Balance December 31, 2018 Adjustment data at December 31 followAccount Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Advertising Expense Supplies Expense Total Balance \( 7,600 \) 69,000 \( 69,000 22,000 43,800 3,100 15,300 19,700 2,900 1,800 \) 3,900 2,900 9,900 3,300 1,800 a. On December 15, Anniston contracted to perform services for a client receiving \(3,100 in advance. Anniston recorded this receipt of cash as Unearned Revenue. As of December 31, Anniston has completed \)2,100 of the services. b. Anniston prepaid two months of rent on December 1. (Assume the Prepaid Rent balance as shown on the unadjusted trial balance represents the two months of rent prepaid on December 1.) c. Anniston used \(750 of office supplies. d. Depreciation for the equipment is \)850. e. Anniston received a bill for December’s online advertising, \(1,100. Anniston will not pay the bill until January. (Use Accounts Payable.) f. Anniston pays its employees on Monday for the previous week’s wages. Its employees earn \)3,500 for a five-day workweek. December 31 falls on Wednesday this year. g. On October 1, Anniston agreed to provide a four-month air system check (beginning October 1) for a customer for $3,400. Anniston has completed the system check every month, but payment has not yet been received and no entries have been made. Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the T-accounts with the unadjusted balances. Post the adjusting entries to the T-accounts. 3. Prepare the adjusted trial balance. 4. How will Anniston Air Purification System use the adjusted trial balance?

The unadjusted trial balance of Anniston Air Purification System at December 31, 2018, and the data needed for the adjustments follow ANNISTON AIR PURIFICATION SYSTEM Unadjusted Trial Balance December 31, 2018 Adjustment data at December 31 follow Account Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Advertising Expense Supplies Expense Total Balance \( 7,600 \) 69,000 \( 69,000 22,000 43,800 3,100 15,300 19,700 2,900 1,800 \) 3,900 2,900 9,900 3,300 1,800 a. On December 15, Anniston contracted to perform services for a client receiving \(3,100 in advance. Anniston recorded this receipt of cash as Unearned Revenue. As of December 31, Anniston has completed \)2,100 of the services. b. Anniston prepaid two months of rent on December 1. (Assume the Prepaid Rent balance as shown on the unadjusted trial balance represents the two months of rent prepaid on December 1.) c. Anniston used \(750 of office supplies. d. Depreciation for the equipment is \)850. e. Anniston received a bill for December’s online advertising, \(1,100. Anniston will not pay the bill until January. (Use Accounts Payable.) f. Anniston pays its employees on Monday for the previous week’s wages. Its employees earn \)3,500 for a five-day workweek. December 31 falls on Wednesday this year. g. On October 1, Anniston agreed to provide a four-month air system check (beginning October 1) for a customer for $3,400. Anniston has completed the system check every month, but payment has not yet been received and no entries have been made.  Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the T-accounts with the unadjusted balances. Post the adjusting entries to the T-accounts. 3. Prepare the adjusted trial balance. 4. How will Anniston Air Purification System use the adjusted trial balance?

The unadjusted trial balance of Anniston Air Purification System at December 31, 2018, and the data needed for the adjustments follow ANNISTON AIR PURIFICATION SYSTEM Unadjusted Trial Balance December 31, 2018 Adjustment data at December 31 follow Account Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Advertising Expense Supplies Expense Total Balance \( 7,600 \) 69,000 \( 69,000 22,000 43,800 3,100 15,300 19,700 2,900 1,800 \) 3,900 2,900 9,900 3,300 1,800 a. On December 15, Anniston contracted to perform services for a client receiving \(3,100 in advance. Anniston recorded this receipt of cash as Unearned Revenue. As of December 31, Anniston has completed \)2,100 of the services. b. Anniston prepaid two months of rent on December 1. (Assume the Prepaid Rent balance as shown on the unadjusted trial balance represents the two months of rent prepaid on December 1.) c. Anniston used \(750 of office supplies. d. Depreciation for the equipment is \)850. e. Anniston received a bill for December’s online advertising, \(1,100. Anniston will not pay the bill until January. (Use Accounts Payable.) f. Anniston pays its employees on Monday for the previous week’s wages. Its employees earn \)3,500 for a five-day workweek. December 31 falls on Wednesday this year. g. On October 1, Anniston agreed to provide a four-month air system check (beginning October 1) for a customer for $3,400. Anniston has completed the system check every month, but payment has not yet been received and no entries have been made.  Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the T-accounts with the unadjusted balances. Post the adjusting entries to the T-accounts. 3. Prepare the adjusted trial balance. 4. How will Anniston Air Purification System use the adjusted trial balance?

The unadjusted trial balance of Guthrie Inn Company at December 31, 2018, and the data needed for the adjustments follow. Adjustment data at December 31 follow: GUTHRIE INN COMPANY Unadjusted Trial Balance December 31, 2018  Account Title Prepaid Insurance Cash Debit Credit Accounts Receivable Office Supplies Building Accumulated Depreciation—Building Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Insurance Expense Depreciation Expense—Building Advertising Expense Supplies Expense Total Balance \( 13,500 \) 569,760 \( 569,760 530,000 288,950 3,600 15,500 15,100 4,600 800 \) 260,000 1,710 2,340 2,800 620 G  a. As of December 31, Guthrie had \(700 of Prepaid Insurance remaining. b. At the end of the month, Guthrie had \)500 of office supplies remaining. c. Depreciation on the building is \(1,200. d. Guthrie pays its employees weekly on Friday. Its employees earn \)1,800 for a five-day workweek. December 31 falls on Wednesday this year. e. On November 20, Guthrie contracted to perform services for a client receiving \(3,600 in advance. Guthrie recorded this receipt of cash as Unearned Revenue. As of December 31, Guthrie has \)1,600 still unearned. Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the accounts (use a four-column ledger) with the unadjusted balances. Post the adjusting entries to the ledger accounts. 3. Prepare the adjusted trial balance. 4. Assuming the adjusted trial balance has total debits equal to total credits, does this mean that the adjusting entries have been recorded correctly? Explain

The unadjusted trial balance of Guthrie Inn Company at December 31, 2018, and the data needed for the adjustments follow. Adjustment data at December 31 follow: GUTHRIE INN COMPANY Unadjusted Trial Balance December 31, 2018   Account Title Prepaid Insurance Cash Debit Credit Accounts Receivable Office Supplies Building Accumulated Depreciation—Building Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Insurance Expense Depreciation Expense—Building Advertising Expense Supplies Expense Total Balance \( 13,500 \) 569,760 \( 569,760 530,000 288,950 3,600 15,500 15,100 4,600 800 \) 260,000 1,710 2,340 2,800 620 G  a. As of December 31, Guthrie had \(700 of Prepaid Insurance remaining. b. At the end of the month, Guthrie had \)500 of office supplies remaining. c. Depreciation on the building is \(1,200. d. Guthrie pays its employees weekly on Friday. Its employees earn \)1,800 for a five-day workweek. December 31 falls on Wednesday this year. e. On November 20, Guthrie contracted to perform services for a client receiving \(3,600 in advance. Guthrie recorded this receipt of cash as Unearned Revenue. As of December 31, Guthrie has \)1,600 still unearned. Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the accounts (use a four-column ledger) with the unadjusted balances. Post the adjusting entries to the ledger accounts. 3. Prepare the adjusted trial balance. 4. Assuming the adjusted trial balance has total debits equal to total credits, does this mean that the adjusting entries have been recorded correctly? Explain

The unadjusted trial balance of Guthrie Inn Company at December 31, 2018, and the data needed for the adjustments follow. Adjustment data at December 31 follow: GUTHRIE INN COMPANY Unadjusted Trial Balance December 31, 2018   Account Title Prepaid Insurance Cash Debit Credit Accounts Receivable Office Supplies Building Accumulated Depreciation—Building Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Insurance Expense Depreciation Expense—Building Advertising Expense Supplies Expense Total Balance \( 13,500 \) 569,760 \( 569,760 530,000 288,950 3,600 15,500 15,100 4,600 800 \) 260,000 1,710 2,340 2,800 620 G  a. As of December 31, Guthrie had \(700 of Prepaid Insurance remaining. b. At the end of the month, Guthrie had \)500 of office supplies remaining. c. Depreciation on the building is \(1,200. d. Guthrie pays its employees weekly on Friday. Its employees earn \)1,800 for a five-day workweek. December 31 falls on Wednesday this year. e. On November 20, Guthrie contracted to perform services for a client receiving \(3,600 in advance. Guthrie recorded this receipt of cash as Unearned Revenue. As of December 31, Guthrie has \)1,600 still unearned. Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the accounts (use a four-column ledger) with the unadjusted balances. Post the adjusting entries to the ledger accounts. 3. Prepare the adjusted trial balance. 4. Assuming the adjusted trial balance has total debits equal to total credits, does this mean that the adjusting entries have been recorded correctly? Explain

The unadjusted trial balance of Guthrie Inn Company at December 31, 2018, and the data needed for the adjustments follow. Adjustment data at December 31 follow: GUTHRIE INN COMPANY Unadjusted Trial Balance December 31, 2018   Account Title Prepaid Insurance Cash Debit Credit Accounts Receivable Office Supplies Building Accumulated Depreciation—Building Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Insurance Expense Depreciation Expense—Building Advertising Expense Supplies Expense Total Balance \( 13,500 \) 569,760 \( 569,760 530,000 288,950 3,600 15,500 15,100 4,600 800 \) 260,000 1,710 2,340 2,800 620 G  a. As of December 31, Guthrie had \(700 of Prepaid Insurance remaining. b. At the end of the month, Guthrie had \)500 of office supplies remaining. c. Depreciation on the building is \(1,200. d. Guthrie pays its employees weekly on Friday. Its employees earn \)1,800 for a five-day workweek. December 31 falls on Wednesday this year. e. On November 20, Guthrie contracted to perform services for a client receiving \(3,600 in advance. Guthrie recorded this receipt of cash as Unearned Revenue. As of December 31, Guthrie has \)1,600 still unearned. Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the accounts (use a four-column ledger) with the unadjusted balances. Post the adjusting entries to the ledger accounts. 3. Prepare the adjusted trial balance. 4. Assuming the adjusted trial balance has total debits equal to total credits, does this mean that the adjusting entries have been recorded correctly? Explain

Question : Greavy Theater Production Company’s partially completed worksheet as of December 31, 2018, follows. Adjustment data at December 31 follow: a. As of December 31, Greavy had performed \(500 of service revenue but has not yet billed customers. b. At the end of the month, Greavy had \)700 of office supplies remaining. c. Prepaid Insurance of \(3,900 remained. d. Depreciation expense, \)4,000. e. Accrued salaries expense of $200 that hasn’t been paid yet. Requirements 1. Complete the worksheet. Use letters a through e to label the five adjustments. 2. Journalize the adjusting entries.

Greavy Theater Production Company’s partially completed worksheet as of December 31, 2018, follows. Adjustment data at December 31 follow: a. As of December 31, Greavy had performed \(500 of service revenue but has not yet billed customers. b. At the end of the month, Greavy had \)700 of office supplies remaining. c. Prepaid Insurance of \(3,900 remained. d. Depreciation expense, \)4,000. e. Accrued salaries expense of $200 that hasn’t been paid yet. Requirements 1. Complete the worksheet. Use letters a through e to label the five adjustments. 2. Journalize the adjusting entries.

Rapid Way Pack’n Mail completed the following transactions during  

                  2018:

Nov. 1  Paid \(9,600 store rent covering the six-month period ending April 30, 2019.

Nov. 1 Paid \)6,000 insurance covering the five-month period ending March 31, 2019.

Dec. 1  Collected \(9,000 cash in advance from customers. The service revenue will be earned \)1,800 monthly over the five-month period ending April 30, 2019.

Dec. 1 Collected \(7,200 cash in advance from customers. The service revenue will be earned \)2,400 monthly over the three-month period ending February 28, 2019.

Requirements

1. Journalize the transactions assuming that Rapid Way debits an asset account for prepaid expenses and credits a liability account for unearned revenues.

2. Journalize the related adjusting entries at December 31, 2018.

3. Post the journal and adjusting entries to the T-accounts, and show their balances at December 31, 2018. (Ignore the Cash account.)

4. Repeat Requirements 1–3. This time, debit an expense account for prepaid expenses and credit a revenue account for unearned revenues.

5. Compare the account balances in Requirements 3 and 4. They should be equal.

Lopez Landscaping has the following data for the December 31 adjusting entries: a. Each Friday, Lopez pays employees for the current week’s work. The amount of the weekly payroll is \(6,500 for a five-day workweek. This year, December 31 falls on a Wednesday. Lopez will pay its employees on January 2. b. On January 1 of the current year, Lopez purchases an insurance policy that covers two years, \)7,500. c. The beginning balance of Office Supplies was \(3,700. During the year, Lopez purchased office supplies for \)5,800, and at December 31 the office supplies on hand total \(3,000. d. During December, Lopez designed a landscape plan and the client prepaid \)6,000. Lopez recorded this amount as Unearned Revenue. The job will take several months to complete, and Lopez estimates that the company has earned 70% of the total revenue during the current year. e. At December 31, Lopez had earned \(7,500 for landscape services completed for Tomball Appliances. Tomball has stated that it will pay Lopez on January 10. f. Depreciation for the current year includes Equipment, \)3,800; and Trucks, \(1,400. g. Lopez has incurred \)250 of interest expense on a $350 interest payment due on January 15. Requirements 1. Journalize the adjusting entry needed on December 31 for each of the previous items affecting Lopez Landscaping. Assume Lopez records adjusting entries only at the end of the year. 2. Journalize the subsequent journal entries for adjusting entries a, d, and g.  

Lopez Landscaping has the following data for the December 31 adjusting entries: a. Each Friday, Lopez pays employees for the current week’s work. The amount of the weekly payroll is \(6,500 for a five-day workweek. This year, December 31 falls on a Wednesday. Lopez will pay its employees on January 2. b. On January 1 of the current year, Lopez purchases an insurance policy that covers two years, \)7,500. c. The beginning balance of Office Supplies was \(3,700. During the year, Lopez purchased office supplies for \)5,800, and at December 31 the office supplies on hand total \(3,000. d. During December, Lopez designed a landscape plan and the client prepaid \)6,000. Lopez recorded this amount as Unearned Revenue. The job will take several months to complete, and Lopez estimates that the company has earned 70% of the total revenue during the current year. e. At December 31, Lopez had earned \(7,500 for landscape services completed for Tomball Appliances. Tomball has stated that it will pay Lopez on January 10. f. Depreciation for the current year includes Equipment, \)3,800; and Trucks, \(1,400. g. Lopez has incurred \)250 of interest expense on a $350 interest payment due on January 15. Requirements 1. Journalize the adjusting entry needed on December 31 for each of the previous items affecting Lopez Landscaping. Assume Lopez records adjusting entries only at the end of the year. 2. Journalize the subsequent journal entries for adjusting entries a, d, and g.  

Harrison Fishing Charters has collected the following data for the December 31 adjusting entries: a. The company received its electric bill on December 31 for \(375 but will not pay it until January 5. (Use the Utilities Payable account.) b. Harrison purchased a three-month boat insurance policy on November 1 for \)3,600. Harrison recorded a debit to Prepaid Insurance. c. As of December 31, Harrison had earned \(1,000 of charter revenue that has not been recorded or received. d. Harrison’s fishing boat was purchased on January 1 at a cost of \)56,500. Harrison expects to use the boat for five years and that it will have a residual value of \(6,500. Determine annual depreciation assuming the straight-line depreciation method is used. e. On October 1, Harrison received \)5,000 prepayment for a deep-sea fishing charter to take place in December. As of December 31, Harrison has completed the charter. Requirements 1. Journalize the adjusting entries needed on December 31 for Harrison Fishing Charters. Assume Harrison records adjusting entries only at the end of the year. 2. If Harrison had not recorded the adjusting entries, indicate which specific category of accounts on the financial statements would be misstated and if the misstatement is overstated or understated. Use the following table as a guide:

Harrison Fishing Charters has collected the following data for the December 31 adjusting entries: a. The company received its electric bill on December 31 for \(375 but will not pay it until January 5. (Use the Utilities Payable account.) b. Harrison purchased a three-month boat insurance policy on November 1 for \)3,600. Harrison recorded a debit to Prepaid Insurance. c. As of December 31, Harrison had earned \(1,000 of charter revenue that has not been recorded or received. d. Harrison’s fishing boat was purchased on January 1 at a cost of \)56,500. Harrison expects to use the boat for five years and that it will have a residual value of \(6,500. Determine annual depreciation assuming the straight-line depreciation method is used. e. On October 1, Harrison received \)5,000 prepayment for a deep-sea fishing charter to take place in December. As of December 31, Harrison has completed the charter. Requirements 1. Journalize the adjusting entries needed on December 31 for Harrison Fishing Charters. Assume Harrison records adjusting entries only at the end of the year. 2. If Harrison had not recorded the adjusting entries, indicate which specific category of accounts on the financial statements would be misstated and if the misstatement is overstated or understated. Use the following table as a guide:

Harrison Fishing Charters has collected the following data for the December 31 adjusting entries: a. The company received its electric bill on December 31 for \(375 but will not pay it until January 5. (Use the Utilities Payable account.) b. Harrison purchased a three-month boat insurance policy on November 1 for \)3,600. Harrison recorded a debit to Prepaid Insurance. c. As of December 31, Harrison had earned \(1,000 of charter revenue that has not been recorded or received. d. Harrison’s fishing boat was purchased on January 1 at a cost of \)56,500. Harrison expects to use the boat for five years and that it will have a residual value of \(6,500. Determine annual depreciation assuming the straight-line depreciation method is used. e. On October 1, Harrison received \)5,000 prepayment for a deep-sea fishing charter to take place in December. As of December 31, Harrison has completed the charter. Requirements 1. Journalize the adjusting entries needed on December 31 for Harrison Fishing Charters. Assume Harrison records adjusting entries only at the end of the year. 2. If Harrison had not recorded the adjusting entries, indicate which specific category of accounts on the financial statements would be misstated and if the misstatement is overstated or understated. Use the following table as a guide:

The unadjusted trial balance of Avery Air Purification System at December 31, 2018, and the data needed for the adjustments follow. Account Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Advertising Expense Supplies Expense Total Balance \( 7,100 \) 65,200 \( 65,200 20,000 39,300 2,700 15,900 19,100 2,400 1,400 \) 3,800 3,500 9,400 3,900 1,900   Adjustment data at December 31 follow: a. On December 15, Avery contracted to perform services for a client receiving \(2,700 in advance. Avery recorded this receipt of cash as Unearned Revenue. As of December 31, Avery has completed \)2,100 of the services. b. Avery prepaid two months of rent on December 1. (Assume the Prepaid Rent balance as shown on the unadjusted trial balance represents the two months of rent prepaid on December 1.) c. Avery used \(750 of office supplies during the month. d. Depreciation for the equipment is \)800. e. Avery received a bill for December’s online advertising, \(500. Avery will not pay the bill until January. (Use Accounts Payable.) f. Avery pays its employees weekly on Monday for the previous week’s wages. Its employees earn \)2,000 for a five-day workweek. December 31 falls on Wednesday this year. g. On October 1, Avery agreed to provide a four-month air system check (beginning October 1) for a customer for $2,800. Avery has completed the system check every month, but payment has not yet been received and no entries have been made. Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the T-accounts with the unadjusted balances. Post the adjusting entries to the T-accounts. 3. Prepare the adjusted trial balance. 4. How will Avery Air Purification System use the adjusted trial balance?

The unadjusted trial balance of Avery Air Purification System at December 31, 2018, and the data needed for the adjustments follow. Account Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Advertising Expense Supplies Expense Total Balance \( 7,100 \) 65,200 \( 65,200 20,000 39,300 2,700 15,900 19,100 2,400 1,400 \) 3,800 3,500 9,400 3,900 1,900   Adjustment data at December 31 follow: a. On December 15, Avery contracted to perform services for a client receiving \(2,700 in advance. Avery recorded this receipt of cash as Unearned Revenue. As of December 31, Avery has completed \)2,100 of the services. b. Avery prepaid two months of rent on December 1. (Assume the Prepaid Rent balance as shown on the unadjusted trial balance represents the two months of rent prepaid on December 1.) c. Avery used \(750 of office supplies during the month. d. Depreciation for the equipment is \)800. e. Avery received a bill for December’s online advertising, \(500. Avery will not pay the bill until January. (Use Accounts Payable.) f. Avery pays its employees weekly on Monday for the previous week’s wages. Its employees earn \)2,000 for a five-day workweek. December 31 falls on Wednesday this year. g. On October 1, Avery agreed to provide a four-month air system check (beginning October 1) for a customer for $2,800. Avery has completed the system check every month, but payment has not yet been received and no entries have been made. Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the T-accounts with the unadjusted balances. Post the adjusting entries to the T-accounts. 3. Prepare the adjusted trial balance. 4. How will Avery Air Purification System use the adjusted trial balance?

The unadjusted trial balance of Avery Air Purification System at December 31, 2018, and the data needed for the adjustments follow. Account Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Advertising Expense Supplies Expense Total Balance \( 7,100 \) 65,200 \( 65,200 20,000 39,300 2,700 15,900 19,100 2,400 1,400 \) 3,800 3,500 9,400 3,900 1,900   Adjustment data at December 31 follow: a. On December 15, Avery contracted to perform services for a client receiving \(2,700 in advance. Avery recorded this receipt of cash as Unearned Revenue. As of December 31, Avery has completed \)2,100 of the services. b. Avery prepaid two months of rent on December 1. (Assume the Prepaid Rent balance as shown on the unadjusted trial balance represents the two months of rent prepaid on December 1.) c. Avery used \(750 of office supplies during the month. d. Depreciation for the equipment is \)800. e. Avery received a bill for December’s online advertising, \(500. Avery will not pay the bill until January. (Use Accounts Payable.) f. Avery pays its employees weekly on Monday for the previous week’s wages. Its employees earn \)2,000 for a five-day workweek. December 31 falls on Wednesday this year. g. On October 1, Avery agreed to provide a four-month air system check (beginning October 1) for a customer for $2,800. Avery has completed the system check every month, but payment has not yet been received and no entries have been made. Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the T-accounts with the unadjusted balances. Post the adjusting entries to the T-accounts. 3. Prepare the adjusted trial balance. 4. How will Avery Air Purification System use the adjusted trial balance?

The unadjusted trial balance of Avery Air Purification System at December 31, 2018, and the data needed for the adjustments follow. Account Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Advertising Expense Supplies Expense Total Balance \( 7,100 \) 65,200 \( 65,200 20,000 39,300 2,700 15,900 19,100 2,400 1,400 \) 3,800 3,500 9,400 3,900 1,900    Adjustment data at December 31 follow: a. On December 15, Avery contracted to perform services for a client receiving \(2,700 in advance. Avery recorded this receipt of cash as Unearned Revenue. As of December 31, Avery has completed \)2,100 of the services. b. Avery prepaid two months of rent on December 1. (Assume the Prepaid Rent balance as shown on the unadjusted trial balance represents the two months of rent prepaid on December 1.) c. Avery used \(750 of office supplies during the month. d. Depreciation for the equipment is \)800. e. Avery received a bill for December’s online advertising, \(500. Avery will not pay the bill until January. (Use Accounts Payable.) f. Avery pays its employees weekly on Monday for the previous week’s wages. Its employees earn \)2,000 for a five-day workweek. December 31 falls on Wednesday this year. g. On October 1, Avery agreed to provide a four-month air system check (beginning October 1) for a customer for $2,800. Avery has completed the system check every month, but payment has not yet been received and no entries have been made. Requirements 1. Journalize the adjusting entries on December 31. 2. Using the unadjusted trial balance, open the T-accounts with the unadjusted balances. Post the adjusting entries to the T-accounts. 3. Prepare the adjusted trial balance. 4. How will Avery Air Purification System use the adjusted trial balance?

The unadjusted trial balance of Midway Inn Company at December 31, 2018, and the data needed for the adjustments follow.

Adjustment data at December 31 follow:

a. As of December 31, Midway Inn had \(800 of Prepaid Insurance remaining.

b. At the end of the month, Midway Inn had \)500 of office supplies remaining.

c. Depreciation on the building is \(2,100.

d. Midway Inn pays its employees on Friday for the weekly salaries. Its employees earn \)1,300 for a five-day workweek. December 31 falls on Wednesday this year.

e. On November 20, Midway Inn contracted to perform services for a client receiving \(1,600 in advance. Midway Inn recorded this receipt of cash as Unearned Revenue. As of December 31, Midway Inn has \)1,400 still unearned.

Requirements

1. Journalize the adjusting entries on December 31.

2. Using the unadjusted trial balance, open the accounts (use a four-column ledger) with the unadjusted balances. Post the adjusting entries to the ledger accounts.

3. Prepare the adjusted trial balance.

4. Assuming the adjusted trial balance has total debits equal to total credits, does this mean that the adjusting entries have been recorded correctly? Explain.

Galaxy Theater Production Company’s partially completed worksheet as of December 31, 2018, follows.

Adjustment data at December 31 follow:

a. As of December 31, Galaxy had performed \(900 of service revenue but has not yet billed customers.

b. At the end of the month, Galaxy had \)500 of office supplies remaining.

c. Prepaid Insurance of \(600 remained.

d. Depreciation expense, \)4,200.

e. Accrued salaries expense of $150 that hasn’t been paid yet.

Requirements

1. Complete the worksheet. Use letters a through e to label the five adjustments.

2. Journalize the adjusting entries.

Sent It Pack’n Mail completed the following transactions during 2018:

Nov. 1  Paid \(6,000 store rent covering the four-month period ending February 28, 2019.

1  Paid \)7,800 insurance covering the six-month period ending April 30, 2019.

Dec. 1 Collected \(12,000 cash in advance from customers. The service revenue will be earned \)2,400 monthly over the five-month period ending April 30, 2019.

1 Collected \(7,500 cash in advance from customers. The service revenue will be earned \)1,500 monthly over the five-month period ending April 30, 2019.

Requirements

1. Journalize the transactions assuming that Sent It Pack’n Mail debits an asset account for prepaid expenses and credits a liability account for unearned revenues.

2. Journalize the related adjusting entries at December 31, 2018.

3. Post the journal and adjusting entries to the T-accounts, and show their balances at December 31, 2018. (Ignore the Cash account.)

4. Repeat Requirements 1–3. This time debit an expense account for prepaid expenses and credit a revenue account for unearned revenues.

5. Compare the account balances in Requirements 3 and 4. They should be equal.

This problem continues the Canyon Canoe Company situation from Chapter 2. You will need to use the unadjusted trial balance and posted T-accounts that you prepared in Chapter 2.

At December 31, the business gathers the following information for the adjusting entries:

a. Office supplies on hand, \(165

b. Rent of one month has been used. (Hint: See Dec. 1 transaction from Chapter 2)

c. Determine the depreciation on the building using straight-line depreciation.

Assume the useful life of the building is five years and the residual value is \)5,000. (Hint: The building was purchased on December 1.)

d. \(400 of unearned revenue has now been earned.

e. The employee who has been working the rental booth has earned \)1,250 in wages that will be paid January 15, 2019.

f. Canyon Canoes has earned \(1,850 of canoe rental revenue that has not been recorded or received.

g. Determine the depreciation on the canoes purchased on November 3 using straight-line depreciation. Assume the useful life of the canoes is 4 years and the residual value is \)0.

h. Determine the depreciation on the canoes purchased on December 2 using straight-line depreciation. Assume the useful life of the canoes is 4 years and the residual value is \(0.

i. Interest expense accrued on the notes payable, \)50.

Requirements

1. Journalize and post the adjusting entries using the T-accounts that you completed in Chapter 2. In the T-accounts, denote each adjusting amount as Adj. and an account balance as Balance.

2. Prepare an adjusted trial balance as of December 31, 2018.

Question: This problem continues the Canyon Canoe Company situation from Chapter 2. You will need to use the unadjusted trial balance and posted T-accounts that you prepared in Chapter 2.

At December 31, the business gathers the following information for the adjusting entries:

a. Office supplies on hand, \(165

b. Rent of one month has been used. (Hint: See Dec. 1 transaction from Chapter 2)

c. Determine the depreciation on the building using straight-line depreciation.

Assume the useful life of the building is five years and the residual value is \)5,000. (Hint: The building was purchased on December 1.)

d. \(400 of unearned revenue has now been earned.

e. The employee who has been working the rental booth has earned \)1,250 in wages that will be paid January 15, 2019.

f. Canyon Canoes has earned \(1,850 of canoe rental revenue that has not been recorded or received.

g. Determine the depreciation on the canoes purchased on November 3 using straight-line depreciation. Assume the useful life of the canoes is 4 years and the residual value is \)0.

h. Determine the depreciation on the canoes purchased on December 2 using straight-line depreciation. Assume the useful life of the canoes is 4 years and the residual value is \(0.

i. Interest expense accrued on the notes payable, \)50.

Requirements

1. Journalize and post the adjusting entries using the T-accounts that you completed in Chapter 2. In the T-accounts, denote each adjusting amount as Adj. and an account balance as Balance.

2. Prepare an adjusted trial balance as of December 31, 2018.

This problem continues the Crystal Clear Cleaning situation from Chapter 2. Start from the unadjusted trial balance that Crystal Clear Cleaning prepared at November 30, 2018:

Consider the following adjustment data:

a. Cleaning supplies on hand at the end of November were \(50.

b. One month’s combined depreciation on all depreciable assets was estimated to be \)150.

c. One month’s interest expense is $59.

Requirements

1. Using the data provided from the trial balance, the previous adjustment information, and the information from Chapter 2, prepare all required adjusting journal entries at November 30.

2. Prepare an adjusted trial balance as of November 30 for Crystal Clear Cleaning.

One year ago, Tyler Stasney founded Swift Classified Ads. Stasney remembers that you took an accounting course while in college and comes to you for advice. He wishes to know how much net income his business earned during the past year in order to decide whether to keep the company going. His accounting records consist of the T-accounts from his ledger, which were prepared by an accountant who moved to another city. The ledger at December 31 follows. The accounts have not been adjusted.

Stasney indicates that at year-end, customers owe the business \(1,600 for accrued service revenue. These revenues have not been recorded. During the year, Swift Classified Ads collected \)4,000 service revenue in advance from customers, but the business earned only \(900 of that amount. Rent expense for the year was \)2,400, and the business used up \(1,700 of the supplies. Swift determines that depreciation on its equipment was \)5,000 for the year. At December 31, the business owes an employee $1,200 accrued salary. Help Swift Classified Ads compute its net income for the year. Advise Stasney whether to continue operating Swift Classified Ads.

Before you begin this assignment, review the Tying It All Together feature in the chapter.

iHeartMedia, Inc. in their annual report for the year ending December 31, 2015, state that the plant assets reported on its balance sheet includes the following:

Buildings and improvements                                                   10 to 39 years

Structures                                                                                     5 to 15 years

Towers, transmitters, and studio equipment                            7 to 20 years

Depreciation is computed using the straight-line method.

Requirements

1. Suppose iHeartMedia, Inc. purchases a new advertising structure for \(100,000 on August 1. The residual value of the structure is \)4,000 and the use fullife is 10 years. How would iHeartMedia record the depreciation expense on December 31 in the first year of use? What about the second year of use?

2. What would be the book value of the structure at the end of the first year? What would be the book value of the structure at the end of the second year?

3. What would be the impact on iHeartMedia, Inc. financial statements if they failed to record the adjusting entry related to the structure?

One year ago, Tyler Stasney founded Swift Classified Ads. Stasney remembers that you took an accounting course while in college and comes to you for advice. He wishes to know how much net income his business earned during the past year in order to decide whether to keep the company going. His accounting records consist of the T-accounts from his ledger, which were prepared by an accountant who moved to another city. The ledger at December 31 follows. The accounts have not been adjusted.

Stasney indicates that at year-end, customers owe the business \(1,600 for accrued service revenue. These revenues have not been recorded. During the year, Swift Classified Ads collected \)4,000 service revenue in advance from customers, but the business earned only \(900 of that amount. Rent expense for the year was \)2,400, and the business used up \(1,700 of the supplies. Swift determines that depreciation on its equipment was \)5,000 for the year. At December 31, the business owes an employee $1,200 accrued salary. Help Swift Classified Ads compute its net income for the year. Advise Stasney whether to continue operating Swift Classified Ads.

Question: One year ago, Tyler Stasney founded Swift Classified Ads. Stasney remembers that you took an accounting course while in college and comes to you for advice. He wishes to know how much net income his business earned during the past year in order to decide whether to keep the company going. His accounting records consist of the T-accounts from his ledger, which were prepared by an accountant who moved to another city. The ledger at December 31 follows. The accounts have not been adjusted.

Stasney indicates that at year-end, customers owe the business \(1,600 for accrued service revenue. These revenues have not been recorded. During the year, Swift Classified Ads collected \)4,000 service revenue in advance from customers, but the business earned only \(900 of that amount. Rent expense for the year was \)2,400, and the business used up \(1,700 of the supplies. Swift determines that depreciation on its equipment was \)5,000 for the year. At December 31, the business owes an employee $1,200 accrued salary. Help Swift Classified Ads compute its net income for the year. Advise Stasney whether to continue operating Swift Classified Ads.

The net income of Steinbach & Sons, a landscaping company, decreased sharply during 2018. Mort Steinbach, owner and manager of the company, anticipates the need for a bank loan in 2019. Late in 2018, Steinbach instructs the company’s accountant to record \(2,000 service revenue for landscape services for the Steinbach family, even though the services will not be performed until January 2019. Steinbach also tells the accountant not to make the following December 31, 2018, adjusting entries:

Salaries owed to employees \) 900

Prepaid insurance that has expired 400

Requirements

1. Compute the overall effects of these transactions on the company’s reported net income for 2018.

2. Why is Steinbach taking this action? Is his action ethical? Give your reason, identifying the parties helped and the parties harmed by Steinbach’s action.

3. As a personal friend, what advice would you give the accountant?

The net income of Steinbach & Sons, a landscaping company, decreased sharply during 2018. Mort Steinbach, owner and manager of the company, anticipates the need for a bank loan in 2019. Late in 2018, Steinbach instructs the company’s accountant to record \(2,000 service revenue for landscape services for the Steinbach family, even though the services will not be performed until January 2019. Steinbach also tells the accountant not to make the following December 31, 2018, adjusting entries:

Salaries owed to employees \) 900

Prepaid insurance that has expired 400

Requirements

1. Compute the overall effects of these transactions on the company’s reported net income for 2018.

2. Why is Steinbach taking this action? Is his action ethical? Give your reason, identifying the parties helped and the parties harmed by Steinbach’s action.

3. As a personal friend, what advice would you give the accountant?

Question: The net income of Steinbach & Sons, a landscaping company, decreased sharply during 2018. Mort Steinbach, owner and manager of the company, anticipates the need for a bank loan in 2019. Late in 2018, Steinbach instructs the company’s accountant to record \(2,000 service revenue for landscape services for the Steinbach family, even though the services will not be performed until January 2019. Steinbach also tells the accountant not to make the following December 31, 2018, adjusting entries:

Salaries owed to employees \) 900

Prepaid insurance that has expired 400

Requirements

1. Compute the overall effects of these transactions on the company’s reported net income for 2018.

2. Why is Steinbach taking this action? Is his action ethical? Give your reason, identifying the parties helped and the parties harmed by Steinbach’s action.

3. As a personal friend, what advice would you give the accountant?

In 75 words or fewer, explain adjusting journal entries.

Question: In 75 words or fewer, explain adjusting journal entries