Question

Woodcomb Ltd. has a March 31 year end and prepares adjusting journal entries annually.  For each of the following situations prepare the necessary adjusting journal entries for March 31, 2020. If no entry is required, clearly indicate by saying “No Entry”.

Show all calculations clearly and round to the dollar.  Do not show entries that are not adjusting journal entries.

1. The unadjusted trial balance at March 31, 2020 has a balance of $7,320 in the supplies account.  A physical count on March 31 shows $1,260 of supplies on hand.

2. On December 1, 2019, Woodcomb provided a $15,000 note receivable to a small business with a 5.5% interest rate.  This note is for a six-month term, maturing June 1, 2020, and at that time the full amount of the note plus all of the interest must be repaid.

3. The unadjusted unearned revenue account shows $11,200 outstanding.  An assessment was completed and it was found that at March 31, 2020 there was still $5,100 in services to be provided in April.

4. On May 28, 2019, Woodcomb paid $4,800 for a one-year insurance policy that was to begin on June 1, 2019.
   
5. Woodcomb purchased a vehicle costing $28,000 on Feb 1, 2020.  Management believes the vehicle will be used for 7 years.
   
6. Consulting services were provided to a customer between March 28 and 31 worth $1,950 but the employee who usually records the billing was on holidays until April 4, 2020.

7. To successfully complete a consulting engagement, Woodcomb organized renting a specific office machine for $550.  It was supposed to be delivered for use on March 25 but the machine was damaged and will not be available until April 8.

8. Woodcomb has paid $20,200 to the government for income tax installments this year.  The finalized financial statements now suggest that $26,100 is owed in total for the year.  This installment will be paid within 30 days.

Answer 1

Prepare the journal entries as follows:

Trn.	Account Titles	Debit	Credit
1)	Supplies Expense [$7320 - $1260]	$6,060
	Supplies		$6,060
	(To record supplies expense)
2)	Interest Receivable [$15000 × 5.5% × 4/12]	$275
	Interest Revenue		$275
	(To record interest revenue)
3)	Unearned revenue [$11200 - $5100]	$6,100
	Revenue Earned		$6,100
	(To record revenue earned)
4)	Insurance Expense [$4800 ÷ 12 ] × 10 months	$4,000
	Prepaid Insurance		$4,000
	(To record insurance expense)
5)	Depreciation Expense [$28000/7 years] × 2/12	$666
	Accumulated depreciation		$666
	(To record depreciation expense for 2 months)
6)	Accounts Receivable	$1,950
	Consulting service revenue		$1,950
	(To record consulting revenue)
7)	No entry
8)	Income Tax Expense [$26100 - $20200]	$5,900
	Income Tax payable		$5,900
	(To record income tax expense)