Question

Adjusting Journal Entries (AJE’s):

1. Wages earned by employees during December (’17) and to be paid in January (’18) are $35,875; associated payroll taxes on these wages are $2,910. (Record in two separate adjusting entries. The payroll taxes are an expense to the company for unemployment benefits and recorded as a payable to the state & federal taxing authority.)

2. The Unearned Consulting Revenue account has a balance of $261,220 as of December 31, 2017. On May 1,2017 a client paid CMC $153,000 cash in advance for a 12-month consulting services contract. CMC will earn revenue evenly over this 12-month period. This was the only prepayment received from clients during the entire 2017 fiscal year and recorded with a credit to Unearned Revenue. Of the remaining balance in Unearned Revenue (i.e. at Jan 1 2017), 65% of the work has now been completed by year end.

3. You discover that a sale of a product was made on account and recorded in December for $148,500; the product hasnot yet been shipped (i.e. delivered to the customer). The cost of the product was 55% of its selling price.CMC uses the perpetual inventory method.

4. Bad debt expense is estimated to be 6% of ending Accounts Receivable. (Round to the nearest whole dollar.)

5. CMC prepays for some insurance and advertising. The Prepaid Expense account has a balance of $26,774 at year end but before adjustment. This balance includes $12,200 for a two-year casualty insurance policy purchased on March 1, 2017. Of the remaining prepaid balance, 60% of the advertisinghas now been used. (Round to the nearest whole dollar.)

6. CMC records depreciation and amortization expense annually as one compound adjusting journal entry. They do not use an accumulated amortization account. Annual depreciation rates are 7% for Buildings/Equipment/Furniture, no salvage. (Round to the nearest whole dollar.) Annual Amortization rates are 10% of original cost, straight-line method, no salvage. The patent was acquired on October 1, 2015. The last time depreciation & amortization were recorded was December 31, 2016.  

Answer 1

			All in $
1	Salary	35875
	Accrued Payroll		35875
	Salary	2910
	Accr Payroll Taxes- State & federal taxing authority		2910
2	Balance in unearned account as of 31 Dec 2017	$261,220
	As on May 1, 2017 - advance recived from customer	$153,000
	Cash	153,000
	Unearned revenue-CMC		153,000
Dec-17	Unearned revenue	102,000
	Sales-CMC		102,000
Dec-17	Unearned revenue	$70,343.00
	Sales-CMC		$70,343.00
3	Sales	148,500
	Inventory	81,675
	COGS		81,675
	Accounts Receivable		148,500
4	Baddebt	42627.18
	Accounts Receivable(913780-54827-148500)		42627.18
5	Insurance expense(12200/24*10)	5083.333333
	To prepaid expense		5083.333333
	Advertisement	8744.4
	To prepaid expense(26774-12200)		8744.4
6	Need patent value