Question

Question 1

Bee Clean Corp. has a year-end of December 31.

Using the information and the template for journal entries below, prepare the adjusting journal entries required at December 31, 2020 for the following transactions. No explanations are required.

1) On January 1, 2020, the company purchased and recorded a 5 year insurance policy for $10,000 in the Prepaid Insurance Account.

2) The company prepaid and recorded $9,000 for 3 months rent on November 1, 2020 in the Prepaid Rent Account.

3) The company purchased supplies at the beginning of the year for $12,250 and recorded the purchase in the Supplies Inventory Account. Only $6,500 worth of supplies remained on hand at December 31, 2020.

4) The company owes $900 in interest expense for a loan taken earlier in the year; the company has not yet recorded or paid the interest.

5) Services performed but unbilled and uncollected from customers at year-end is $6,500.

6) Salary expense is $7,500 per week, for work performed Monday through Friday. The business pays employees each Friday. December 31, 2020 fell on a Thursday.

7) The company received $4,500 from a customer in advance which was posted to the Service Revenues account. By the end of December, 60% of services were completed for the customer.

8) Equipment was purchased at the beginning of the year at a cost of $35,000. The equipment’s useful life is seven years.

9) The company had advertisement costs of $1,300 during December which the company has not recorded. The company also has not received an invoice from the vendor.

Answer 1

Adjusting Entries

Serial Number	Accounts title and explanation	Debit	Credit
(1)	Insurance Expense	2,000
	Prepaid Insurance [10,000 / 5]		2,000
	[Adjustment entry made for expired prepaid insurance ]
(2)	Rent Expense	6,000
	Prepaid Rent [9,000 X 2/3]		6,000
	[Adjustment entry made for expired prepaid rent]
(3)	Supplies Expense	5,750
	Supplies Inventory [12,250 - 6,500]		5,750
	[Adjustment entry made for supplies consumed ]
(4)	Interest Expense	900
	Interest Payable		900
	[Adjustment entry made for due but unpaid interest expense ]
(5)	Accounts Receivable	6,500
	Service Revenue		6,500
	[Service revenue performed on account ]
(6)	Salaries Expense [7,500 X 4/5]	6,000
	Salaries Payable		6,000
	[Adjustment entry made for salaries expense due but not paid ]
(7)	Service Revenue	1,800
	Unearned Revenue [4,500 X 40%]		1,800
	[Advance received but service yet to be provided ]
(8)	Depreciation Expense - Equipment	5,000
	Accumulated depreciation - Equipment [35,000 / 7]		5,000
	[Adjustment entry made for depreciation expense on equipment]
(9)	Advertisement Expense	1,300
	Accrued advertisement expense		1,300
	[Advertisement expense due but not paid ]

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