Part A) Record the entry to fix the premature recording of advertising revenue.
ID: 2338272 • Letter: P
Question
Part A) Record the entry to fix the premature recording of advertising revenue. Part B) Record the entry to update the rent accounts. Part C) Record the depreciation on equipment for the period. Part D) Record the entry to update deferred revenue Part E) Record the entry to accrue revenue not yet billed Part F) Record the entry to accrue unpaid wages. Part G) Record the entry to correct the supplies accounts Part H) Record the entry to accrue income taxes for the year.
E4-20 Preparing Adjusting Entrles, an Adjusted Trial Balance, and Flnancial Statements [LO 4-1, LO 4-2 LO 4-3, LO 4-4] (General Ledger) Bill's Board n outdoor advertising company ounded by William Longfall. Wilsm knawe very ttle accounting so he hlred friend to "keep the baoks" Urfortunstely, Willsm did nat revew hls friend's work and now tseema his friend has msde a mesa ofthe accounting records. llsm hss pravided you the following lt of unsdjusted sccount balances at B8- September 30 fecal year-end. Yau have revlewed the bslsnces with William and made notes shown In the right column. BILL'S BOARDS Unadjusted Trial Balance At September 3e Debits Credits Notes This balance equals the balance reported by the bank A custoner ordered $1,808 of advertising services to be provided in October. The accountant recorded this service by debiting Accounts Receivable and crediting Service 1,808 Receivable Prepaid Rent Bee Starting January 1, B8 agreed to pay $1,288 cash to rent the land on which its billboards are located, for the periad. The accountant adjusted this account on April 30 but has not adjusted it since BB still has supplies costing $280 on hand on Septenber Supplies BB bought scaffolding and billboards in October last year Equipment Accunulated 6,808 $Because the equipnent was bought at the beginning of the Depreciation fiscal year, no depreciation is carried forward fr prior years Accounts Payable 2,808 B8 purchased and received $2,803 of supplies used for creating advertising displays. The supplier is to be paid in October Deferred Revenue 1,5e8 This balance relates to $1,508 cash paid by a custoner in August for advertising fr September 1-November 30 half of Septenber ear Salaries and Nages Payable 8 BB's enplayees are stil1 aiting to be paid for the last 258 BB hasn't paid the $258 tax owed fron the last fiscal Payable Carnon Stock Retained Earnings 1,808 BB has issued 2,080 shares for $1,803 cash 3,758 B8 started business a few years ago, so this is the total accurulated carnings up to October 1 of last year Service Revenue 6e,70a B8 has provided $2,803 of services for which it hasn't yet billed custoners or recorded in its accounting records BB's enployees carn $4,880 per nonth. The enplayces were paid in full on August 31, and were paid again on Septenber 15 About $1, 583 of the usefulness of the equipnent's $6,98 cost has been used up during the current fiscal year BB incurs a small cost to rent the land on which its billboards are located. Rent for the current year has been paid in full B8's accountant expensed $2,880 of supplies purchased during the year because he assuned the supplies would be corpletely used by year-end. As noted above, he as Salaries and Nages Expense 46,808 Expense Rent Expense 488 Supplies Expense 2,808 BB's tax rate is 20% of income before tax. Incone Tax Expenso Totals 69,208 $69,2e8 Requiremant Prepare the adjusting journal entries for the year anded September 30. f no entry Is required for a No Journal Entry Required" in the first account field.) Journal entry worksheet 1 2 3578 Record the entry to fx the premsture recording of advertising revenue Date CreaitExplanation / Answer
A) The advertising revenue has been prematurely booked for the services to be provided in the month of October and the customer's account has been shown as an accounts receivable. The entry shall be reversed.
B) The rent account is adjusted by the accountant till April 30. Hence, the rent should be booked for the months of May to September (5 months) and prepaid rent account should be reduced. Amount = 500 (1200 * 5 months / 12 months)
C) Depreciation expense of $ 1,500 needs to be booked.
D) The customer has paid $ 1,500 for the advertisement services during September to November (3 months). The books are prepared as on 30th September. Hence the revenue for 1 month, i.e. $ 500 (1500 * 1 month / 3 months) shall be booked and deferred revenue shall be reversed by the same amount.
E) The company has not yet billed for an amount of $ 2,000 which now needs to be billed for.
F) BB's employees haven't been paid for the second half of September. Hence, an entry shall be passed to reflect the amount payable to them. Amount = $ 2,000 (4000 per month * 0.5 month)
G) BB still has supplies worth $ 200 left which should be booked as an asset and the supplies expense account should be reversed by the same amount.
H) The income tax rate for the company is 20%.
The income earned can be calculated as: Service Revenue $ 62,200 (60700-1000+500+2000) Less Salaries and Wage Expense $ 48,000 (46000+2000) Less Depreciation Expense $ 1,500 Less Rent Expense $ 900 (400+500) Less Supplies Expense $ 1,800 (2000-200) which equals to $ 10,000. Therefore 20% income tax would amount to $ 2,000 (10000 * 20%).
September 30 Service Revenue A/c Dr. 1,000 To Accounts Receivable A/c 1,000