Question

In: Accounting

The events listed below all took place on 15 june 2016. Provide the journal entry necessary...

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.

Solutions

Expert Solution

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


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