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son4ous [18]
3 years ago
7

For each of the following transactions for the Sky Blue Corporation, prepare the adjusting journal entries required on October 3

1. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
(a) Collected $2,400 rent for the period October 1 to December 31, which was credited to Deferred Revenue on October 1.
(b) Paid $1,200 for a two-year insurance premium on October 1 and debited Prepaid Insurance for that amount.
(c) Used a machine purchased on October 1 for $48,000. The company estimates annual depreciation of $4,800.
Business
1 answer:
alexandr1967 [171]3 years ago
4 0

Answer:

(a) Debit Deferred revenue   $800

    Credit Revenue                 $800

    Being entries to recognize revenue earned as at October 31.

(b)  Debit Insurance expense   $400

     Credit Prepaid Insurance    $400

     Being entries to record insurance expense incurred as at October 31.

(c) Debit Depreciation expense  $400

    Credit Accumulated depreciation  $400

    Being entries to record depreciation expense on machine as at October 31

Explanation:

Adjusting entries are required when transactions have occurred but are yet to be properly accounted for in the company's books.

(a) Cash collected in advance results in the debit in cash account and a credit to deferred revenue. When the revenue is earned, it is recognized by crediting revenue and debiting deferred revenue with the amount earned.

As at October 31, amount earned

= 1/3 × $2,400

= $800

Entries required

Debit Deferred revenue   $800

Credit Revenue                 $800

Being entries to recognize revenue earned as at October 31.

(b) For amount paid in advance, the expense is recorded when incurred by debiting the expense account and crediting prepaid account to reduce the amount prepaid.

Expense incurred as at October 31

= 1/3 × $1,200

= $400

Entries required

Debit Insurance expense   $400

Credit Prepaid Insurance    $400

Being entries to record insurance expense incurred as at October 31.

(c) Depreciation expense is recognized as the fixed asset is used by debiting the expense account and crediting the accumulated depreciation account.

Since the annual depreciation is $4,800

Monthly depreciation = 1/12 × $4800

= $400

Entries required

Debit Depreciation expense  $400

Credit Accumulated depreciation  $400

Being entries to record depreciation expense on machine as at October 31

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Apply the accounting equation to the following problem. Total assets of Charter Company equal $700,000, and its equity is $420,0
natulia [17]

Answer:

The amount of its liabilities is 280000

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3 years ago
a manufacturer reports the following costs to produce 11,000 units in its first year of operations: direct materials, $11 per un
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Direct labor                       24

Variable overhead            10

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Learn more about absorption costing here:brainly.com/question/26276034

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1 year ago
Prepaid expenses require what type of adjusting entry? Question options: Matched Accumulated Accrued Deferral
yanalaym [24]

Answer:

deferral

Explanation:

Adjusting entries are when changes are made to already recorded journal entries.

Categories of adjusting entries :

  1. accrued revenues
  2. accrued expenses
  3. unearned revenues
  4. prepaid expenses
  5. depreciation.

Prepaid expenses are payments made for services yet to be delivered.

For example, paying for a year's worth of subscription on your streaming service

Prepaid expenses is an example of deferred payment, so the adjustment should be a deferral

7 0
3 years ago
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