Question

App Problem 2-81 Preparing Reversing Entries Log b. Prepare an accruauustu ... Rona Company is a calendar-year manufacturer. Rona is reviewing the following transactions for possibles ing entries at December 31, 2020. 1. One of Rona Company's liabilities is a 12%, 540,000 long-term note payable, which requires interes paid each March 1 and September 1. 2. Rona Company owns a $20,000, 10% bond, which it purchased at face value and which pays interest August 1 and February 1. 3. Rona Company performed and completed services for a customer in December for a $12,000 total fe: 1 customer was not billed and did not remit payment in the current year. The customer has a strong as rating. 4. Depreciation of $30,000 is to be recorded. 5. Salaries totaling $15,000 were earned but not paid or recorded at year-end. The first payroll in 200164 pected to total $45,000 6. Rona paid $4,800 cash for a one-year insurance policy on September 1, 2020. Rona records the full an! on September 1 as insurance expense. Required For each of the 6 items described above, provide the following: a. December 31, 2020, adjusting entry. b. January 1, 2021, reversing entry (if a reversing entry is not appropriate, explain why). c. Entry for the associated transaction to occur in 2021 if one is expected.
USCU Statement of income. 1. App-Problem 2-81 Preparing Reversing Rona Company is a calendar-year manufacturer. Rona is reviewing the following transactions for possible adjust- Entries Log ing entries at December 31, 2020. One of Rona Company's liabilities is a 12%, $40,000 long-term note payable, which requires interest to be paid each March 1 and September 1. 2. Rona Company owns a $20,000, 10% bond, which it purchased at face value and which pays interest each August 1 and February 1. 3. Rona Company performed and completed services for a customer in December for a $12,000 total fee. The customer was not billed and did not remit payment in the current year. The customer has a strong credit rating. 4. Depreciation of $30,000 is to be recorded. 5. Salaries totaling $15,000 were earned but not paid or recorded at year-end. The first payroll in 2021 is ex- pected to total $45,000. 6. Rona paid $4,800 cash for a one-year insurance policy on September 1, 2020. Rona records the full amount on September 1 as insurance expense. Required For each of the 6 items described above, provide the following: a. December 31, 2020, adjusting entry. b. January 1, 2021, reversing entry (if a reversing entry is not appropriate, explain why). c. Entry for the associated transaction to occur in 2021 if one is expected.

Answer 1

1.

Date	Account Titles	Debit	Credit
31-Dec	Interest Expense	$          21,600
2020	Interest Payable		$          21,600
	(Adjusting Entry)
1-Jan	Interest Payable	$          21,600
2021	Interest Expense		$          21,600
	(Reversing Entry)
1-Mar	Interest Expense	$          32,400
2021	Cash		$          32,400
	(Associated Entry in 2021)

2.

Date	Account Titles	Debit	Credit
31-Dec	Interest Receivable	$               833
2020	Interest Revenue		$               833
	(Adjusting Entry)
1-Jan	Interest Revenue	$               833
2021	Interest Receivable		$               833
	(Reversing Entry)
1-Feb	Cash	$            1,000
2021	Interest Revenue		$            1,000
	(Associated Entry in 2021)

3.

Date	Account Titles	Debit	Credit
31-Dec	Accounts Receivable	$          12,000
2020	Service Revenue		$          12,000
	(Adjusting Entry)

No Reversing entry and associated entry required in 2021

4.

Date	Account Titles	Debit	Credit
31-Dec	Depreciation Expense	$          30,000
2020	Accumulated Depreciation		$          30,000
	(Adjusting Entry)

No Reversing entry and associated entry required in 2021

5.

Date	Account Titles	Debit	Credit
31-Dec	Salaries Expense	$          15,000
2020	Salaries Payable		$          15,000
	(Adjusting Entry)
1-Jan	Salaries Payable	$          15,000
2021	Salaries Expense		$          15,000
	(Reversing Entry)
	Salaries Expense	$          45,000
2021	Cash		$          45,000
	(Associated Entry in 2021)

6.

Date	Account Titles	Debit	Credit
31-Dec	Prepaid Insurance	$            3,200
2020	Insurance Expense		$            3,200
	(Adjusting Entry)

No Reversing entry and associated entry required in 2021