In: Accounting
The events listed below all took place on 15 june 2016. Provide the journal entry necessary to record each event in the accounts of company X for the year ended 30 June 2016. If no entry is required , indicate this and give reasons. In most cases, an assumption is not necessary. If you feel an assumption is necessary, however, state it.
1) A new general manager is hired at an annual salary of $160000.
2) Company X receives a bill for $200 from a newspaper for an advertisement to be run on 30 June 2016. Payment is not due for 60 days.
3) A loan is obtained from the bank for $20000, repayable in two years time.
4) A landscaper agrees to improve land owned by company X. The agreed price for the work is $700.
5) An order for $900 of merchandise is received from a customer along with a cash deposit of $300.
6) A $600 insurance premium for coverage over the period from 1 July 2016 to 30 June 2017 is paid in cash.
7) Company X places an order for the purchase of supplies with a cost price of $2000.
8) Borrowed $300000 from bank by giving the bank a 9-month, 10 percent interest-bearing note payable.
9) Performed $3000 of the services, the rest will be provided next month.
10) Received the telecommunication bill for $2000 and will be paid in early next month.
11) 1 June received rent in advance of $15000 for the period from 1 June to 1 November.
No. |
Account titles and explanation |
Debit |
Credit |
1 |
No journal entry. As service has not been rendered yet, it is not treated as financial transaction. |
||
2 |
Advertising expense |
200 |
|
Accounts payable |
200 |
||
3 |
Cash |
20000 |
|
Bank |
20000 |
||
(Interest related to loan should be recorded periodically during its term of two years.) |
|||
4 |
No journal entry. As service has not been rendered yet, it is not treated as financial transaction. |
||
5 |
Cash |
300 |
|
Unearned revenue |
300 |
||
6 |
Prepaid insurance |
600 |
|
Cash |
600 |
||
7 |
No journal entry. As supplies has not been received yet, it is not treated as financial transaction. |
||
8 |
Cash |
300000 |
|
Notes payable |
300000 |
||
9 |
Account receivable |
3000 |
|
Service revenue |
3000 |
||
(it is assumed that service is provided on account) |
|||
10 |
Utility expense |
2000 |
|
Accounts payable |
2000 |
||
11 |
Cash |
15000 |
|
Unearned rent (15000*4/5) |
12000 |
||
Rent revenue (15000*1/5) |
3000 |