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P3–4A FancyJohns, the luxury portable toilet rental company, has collected the following data for the December...

P3–4A FancyJohns, the luxury portable toilet rental company, has collected the following data for the December 31 adjusting entries:

  1. Each Friday, FancyJohns pays employees for the current week’s work. The amount of the weekly payroll is $7,000 for a five-day workweek. This year December 31 falls on a Wednesday. FancyJohns will pay its employees on January 2.

  2. On January 1 of the current year, FancyJohns purchased an insurance policy that covers two years, $19,000.

  3. The beginning balance of Cleaning Supplies was $4,000. During the year, FancyJohns purchased cleaning supplies for $5,200, and at December 31 the cleaning supplies on hand total $2,400.

  4. During December, FancyJohns arranged for rentals at a Christmas and a New Year’s Eve party at a resort. The client prepaid $7,000. FancyJohns recorded this amount as Unearned Revenue. FancyJohns estimates that the company has earned 45 percent of the total revenue in the current year and will earn the balance on January 3.

  5. At December 31, FancyJohns had earned $3,500 of a two-month rental at the Outdoor Ice Place. The Outdoor Ice Palce has stated that they will pay FancyJohns the entire balance due for the two months on February 1.

  6. Amortization for the current year includes Equipment, $3,700, and Trucks, $1,300. Make one compound entry to record the amortization, but use separate amortization accounts for each asset.

  7. FancyJohns has incurred $300 of interest expense on a $450 interest payment due on January 15.

Required

  1. Journalize the adjusting entry needed on December 31 for each of the previous items affecting FancyJohns. Assume FancyJohns records adjusting entries only at the end of the year.

  2. Journalize the subsequent journal entries for adjusting entries a, d, and g.

3

Journalizing adjusting entries and subsequent journal entries

b. Insurance Expense, $9,500

Solutions

Expert Solution

In case of any clarification, please do comment. Thank you.

ekkarill92 answered 1 year ago
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