Answer:
The adjusting entries are sufficiently explained in the explanations below. Thank you.
Explanation:
The question is to determine the adjusting entries that are required for the accounts of Aaron Lynch Company for 31 Dec,2019
1) Paid $2,700 for 12 Months insurance cover in June, 2019
Insurance cover for 2019 = 7 monhts (June - Dec)/12 x $2,700= $1,575
Prepaid Insurance for 2020 = 5/12 x $2,700 = $1,125
2)Service Fee Collected for Consulting Services Dec 1, 2019 - March 31,2020
Service Fee for 2019 = 1 months/ 4 Months x $40,000 = $10,000
Unearned for 2020 = 3/ 4 months x $40,000 = $30,000
3)$900 woth of supplies are on hand
This is supply expenses
Based on these calculations, the adjusting journal entries are as follows
Date Description Debit Credit
December, 31, 2019 Prepaid Insurance 1125
Insurance Expense 1,125
Being the record of Prepaid insurance for 2020
December, 31, 2019 Service Revenue 30,000
Unearned Service Revenue 30,000
Being the record of unearned service revenue up till march, 2020
December, 31, 2019 Supplies 900
Supplies Expense 900
Being the record of service revenue on hand December 31, 2020
