Answer:
Florida Palms Country Club
a. Adjusting Journal Entries:
1. Debit Salaries Expense $9,600
Credit Salaries Expense Payable $9,600
To record the unpaid salaries.
2. Debit Accounts Receivable (Tampa University Golf Team) $1,800
Credit Green Fee Revenue $1,800
To record earned revenue not yet billed and recorded.
3. Debit Unearned Membership Dues $106,000
Credit Membership Dues Earned $106,000
To record membership dues earned.
4. Debit Depreciation Expense on Golf Carts $12,000
Credit Accumulated Depreciation $12,000
To record depreciation expense for the year.
5. Debit Interest Expense $300
Credit Interest Expense Payable $300
To accrue interest expense for the month of December.
6. Debit Insurance Expense $6,500
Credit Insurance Prepaid (Unexpired Insurance) $6,500
To record insurance premium for 10 months.
7. No entry is required because the period in which the tournament will be hosted is not disclosed. Revenue is only recorded when performance obligations have been fulfilled.
8. Debit Income Taxes Expense $19,000
Credit Income Taxes Expense Payable $19,000
To record accrued expenses for the year.
b. The types of adjusting entries prepared in part a above are:
Accrued Expenses
Accrued Revenue
Deferred Revenue
Depreciation estimate
c. That Florida Palm's clubhouse is fully depreciated but remains in excellent physical condition results from the fact that depreciation is a systematic allocation of the cost of the clubhouse costs over its estimated useful life. This implies that depreciation is merely an accounting estimate that spreads the cost of the clubhouse over its useful life and not an attempt to put a value on the clubhouse.
Explanation:
a) Data and Calculations:
1. Depreciation Expense on the golf carts = $180,000/15 years = $12,000 per annum based on the straight-line method of depreciation.
2. Interest expense on the bank loan = $45,000 * 8% * 1/12 = $300
3. Insurance Premium Expense = $7,800 * 10/12 = $6,500
