Question

Required:  Make the required adjusting entries on 12/31/XX from the information given above. As a journal description, indicate what accounting principle that would have been violated if the adjusting entry had not been made. Use the journal paper on the next page to make your journal entries.

3. You have been given an unadjusted Trial Balance at the end of Alico Inc. FY (12/31/XX): In reviewing the unadjusted Trial Balance, the following information has come to your attention:

a. Alico Inc. entered into a six-month contract on 11/1/XX to provide maintenance service for six apartment houses owned by a Real Estate Investment Trust. The total value the contract was $185,000 and required a $20,000 prepayment. On 11/1/XX the bookkeeper debited cash and credited Maintenance Revenue for the $20,000 prepayment. On 12/31/XX 20% of the contracted services had been completed.

b.         On 8/1/XX a one year fire insurance policy was purchased for $36,000. The bookkeeper debited Prepaid Insurance Expense and credited Cash to record the transaction. No other journal entries had been made for this transaction.

c.         Wages in the amount of $95,000 had been earned by Alico Inc.' employees but will not be paid until next year. No entry had been made to record this fact.

d.         On 11/1/XX Alico Inc. lent $50,000 to one of its clients and the client signed a 90 day note receivable on this date with interest and principal due and payable on January 31 of the next year. The interest rate was at 14% per year. At the end of the current year Alico Inc.had earned $1,167 in interest on the note. This amount had not yet been recorded.

e.         Depreciation in the amount of $15,000 had not yet been recorded.

Date	Account	Dr	Cr

Answer 1