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Setler79 [48]
3 years ago
11

Rutgers Racquet Club adjusts its accounts monthly. Club members pay their annual dues in advance by January 15. The entire amoun

t is initially credited to Unearned Membership Dues (a liability account). At the end of each month, an appropriate portion of this amount is credited to Membership Dues Earned. Guests of the club members normally pay a court rental fee before being allowed to play. The amounts collected are credited to Court Rental Revenue at the time of receipt. Certain guests are billed for court rental fees at the end of the month. The following information can be used for preparing adjusting entries at December 31, 20x5:
1. Salaries earned by club employees that have not yet been recorded or paid amount to $3,700.
2. A local VFW sponsored a tournament at Rutgers Racquet Club that took place on December 22, 20x5 of the current year. At December 31, the $1,200 owed by the VFW for court rentals on December 22 had not yet been recorded or billed.
3. A one-year fire and flood insurance policy had been purchased on May 31. The entire premium of $7,200 was initially recorded as Prepaid Insurance.
4. Rutgers Racquet Club was built in 20x1. The cost of the building and equipment was $320,000. Depreciation of the club's building and equipment is based on an estimated life of 20 years and a salvage value of $80,000. The straight-line method of depreciation is used.
5. A 36-month bank loan in the amount of $108,000 had been obtained by Rutgers Racquet Club on December 1, 20x5. Interest is computed at an annual rate of 9%. The entire $108,000, plus all of the interest accrued over the 36-month life of the loan, is due in full on December 1, 20x8.
6. Membership dues earned in December, 20x5 for collections received at January 15, 20x5 amounts to $52,000.
7. Unrecorded Income Taxes Expense accrued in December amounts to $16,000. This amount will not be paid until January 15, 20x6.

Required:
For each of the items above, prepare the necessary adjusting entry at December 31, 20x5.
Business
1 answer:
SOVA2 [1]3 years ago
4 0

Answer:

1. Salaries earned by club employees that have not yet been recorded or paid amount to $3,700.

Dr wages expense 3,700

    Cr wages payable 3,700

2. A local VFW sponsored a tournament at Rutgers Racquet Club that took place on December 22, 20x5 of the current year. At December 31, the $1,200 owed by the VFW for court rentals on December 22 had not yet been recorded or billed.

Dr accounts receivable 1,200

    Cr rental fees 1,200

3. A one-year fire and flood insurance policy had been purchased on May 31. The entire premium of $7,200 was initially recorded as Prepaid Insurance.

Dr insurance expense 4,200

    Cr prepaid insurance 4,200

4. Rutgers Racquet Club was built in 20x1. The cost of the building and equipment was $320,000. Depreciation of the club's building and equipment is based on an estimated life of 20 years and a salvage value of $80,000. The straight-line method of depreciation is used.

Dr depreciation expense 12,000

    Cr accumulated depreciation, building 12,000

5. A 36-month bank loan in the amount of $108,000 had been obtained by Rutgers Racquet Club on December 1, 20x5. Interest is computed at an annual rate of 9%. The entire $108,000, plus all of the interest accrued over the 36-month life of the loan, is due in full on December 1, 20x8.

Dr interest expense 810

    Cr interest payable 810

6. Membership dues earned in December, 20x5 for collections received at January 15, 20x5 amounts to $52,000.

Dr unearned membership dues 52,000

    Cr membership dues earned 52,000

7. Unrecorded Income Taxes Expense accrued in December amounts to $16,000. This amount will not be paid until January 15, 20x6.

Dr income tax expense 16,000

    Cr income tax payable 16,000

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