Question

Bourne Inc., a calendar-year end company, had the following select account balances from its unadjusted trial balance at 11/30/19: Credit Cash Supplies Deferred Revenue Debit $4,000 700 $0 The following select transactions occurred during the month of December:
Dec. 1 ---- Purchased $2,000 worth of supplies on account. The "Supplies" account was increased at that time.
Dec. 1 ---- Received $6.000 from a customer for services to be performed evenly over the next six months (beginning in December). The "Deferred Revenue account was increased when the cash receipt was recorded.
Dec. 1 ---- Financed the purchase of land by signing a nine-month, 12%, note payable. The amount financed was $40.000.
Dec 15 - Paid for the Dec 1 purchase of supplies in full.
At the end of December, the following information is also available:
• A physical count of supplies reveals supplies costing $800 are still on hand (unused). Required: In the General Journal which starts on the next page:
• Journalize the four December transactions, and
• Journalize any necessary December 31 adjusting journal entries related to the above transactions in order to properly reflect revenues and expenses for the accounting period. Note: If necessary, round adjusting entry calculations to the nearest whole month and to the nearest whole dollar. Note: Journal entries must be in proper form (ex. debits before credits, indent credits) to receive full credit. Explanations should not be included. Skip a line between each journal entry. Date Account Name Debit Credit

Answer 1

Answer:

                        Bourne Inc.

                     Journal entries

Date    Account Name           Debit       Credit

1-Dec   Supplies                   $2,000

                  Accounts Payable                $2,000

1-Dec    Cash                         $6,000

                  Deferred Revenue                $6,000

1-Dec     Land                          $40,000

                    Notes Payable                     $40,000

15-Dec    Accounts Payable    $2,000

                     Cash                                      $2,000

                           Adjusting entries

Date        Account Name            Debit        Credit

31-Dec     Supplies expense       $1,900

                ($700 + $2,000 - $800)

                       Supplies                                 $1,900

31-Dec     Deferred Revenue        $1,000

                ($6,000/6)

                         Service Revenue                 $1,000

31-Dec      Interest expense           $400

                 ($40,000*12%* 1/12)

                       Interest Payable                      $400