Answer:
The Krug Company
Adjusting Journal Entries for the year ended December 31:
1.a. Debit Unearned Rent Revenue $1,733
Credit Rent Revenue $1,733
To recognize rent revenue earned for 2 months.
1.b. Debit Unearned Services Revenue $345
Credit Services Revenue $345
To recognize services revenue earned for 3 treatments.
1.c. Debit Unearned Revenue $22,400
Credit Rent Revenue $22,400
To recognize rent earned for 4 months.
Explanation:
a) Earned Rent Revenue = $1,733 ($10,800/12 * 2)
b) Earned Service Revenue = $115 x 3 = $345
c) Earned Rent Revenue = $22,400 ($33,600/6 * 4)
d) Adjusting journal entries are entries made at the end of an accounting period to recognize some accrued expenses and revenue, including depreciation in accordance with the accrual concept and the matching principles of generally accepted accounting principles. The accrual concept requires that the accrual basis is used in accounting for revenue and expenses and not the cash basis. Transactions are recognized in the period they occur and not based on when cash is exchanged.
