Question

On April 1^st. (X) Co. the trial balance shows the following:

Prepaid Insurance	4,000
Equipment	20,000
Notes payable	10,000
Unearned Revenue	5,000
Services Revenue	2,200

Additional information:

1. Prepaid insurance for 3-years, effective April 1^st.
2. Depreciation for equipment 1,000 per month.
3. Notes payable were signed at the beginning of April. It is 3-Month, 12% -yearly - note.
4. Five customers paid for the company’s 10-month X services package of $1,000 beginning in April. These customers were serviced in April.
5. X services provided other customer but not billed at April 30 totaled $3,000.

Instruction: prepare the adjusting entries for April.

Answer 1

1]	Insurance expense (4000/36)	$                   111
	Prepaid insurance		$                    111
2]	Depreciation expense-Equipment	$                1,000
	Accumulated depreciation-Equipment		$                1,000
3]	Interest expense (10000*12%/12)	$                   100
	Interest payable		$                    100
4]	Service revenue (5000/10)	$                   500
	Unearned service revenue		$                    500
5]	Accounts receivable	$                3,000
	Service revenue		$                3,000