Question

You have been given the unadjusted trial balance for the Bogie & Bacall Company (“B&B”) as of 12/31/2016. B&B prepares financial statements annually. Your required tasks are as follows:

1. On the designated worksheet, prepare in journal entry form the adjusting journal entries for the following items. Letter entries to correspond to the below information and present them in alphabetical order. (Round all numbers to the nearest dollar)

a. On April 1, 2016 B&B paid Lorre Advertising $48,000 for two years of advertising services. Equal services are provided in year 1 and year

2. b. B&B needed some additional storage space so on July 1, 2016 they rented a unit for an annual rate of $10,200. The entire amount was expensed when paid.

c. $4,250 of store supplies were purchased during the year and the asset Store Supplies was increased. $3,000 of these supplies were used during the year.

d. $6,500 of office supplies were purchased during the year and were immediately expensed. A count of the office supplies on hand December 31, 2016, indicates a balance of $1,250.

e. On August 1, 2016, B&B issued a 9-month note receivable to Greenstreet & Co. at an annual interest rate of 6%. Principal and interest will be paid at the end of the 9-months. The note was recorded in Notes Receivable and is the only note outstanding.

f. Sales salaries of $4,800 and office salaries of $5,500 had been earned and remained unpaid at 12/31/16.

g. On December 1, 2016, B&B rented a portion of one store to Paul Henreid Co. The contract was for 6 months and B&B required the 6 months of cash upfront on December 1st. The rent is being earned equally over the next 6 months. When cash was received, unearned rent was appropriately recorded.

h. On May 1, 2016, B&B collected $19,200 for consulting services to be performed from May 1, 2016 to April 30, 2017. The company credited the revenue account when the cash was received.

i. At 12/31/2016, based on the aging method, B&B determines that uncollectible accounts are $5,250.

Answer 1

Date	Account	Debit	credit
a	Advertising expense	18000
	prepaid advertising		18000
	[advertsing expense expired for 9 months (1april -31dec) 48000*9/24months]
b	Prepaid rent	5100
	Rent expense		5100
	[being rent for 6 months not yet accrued 10200*6/12][1july -31 dec]
c	supplies expense -store	3000
	supplies -store		3000
	supplies used]
d	Office supplies	1250
	supplies expense-office		1250
	[being supplies not used recorded]
e	Interest receivable	600
	Interest revenue		600
	[being interest earned but not received for 5 months (1aug -31dec)[principal amount of note is missing]24000*.06*5/12]
f	salaries expense	10300
	salaries payable		10300
	[being salary accrued but not paid ]4800+5500]
g	Unearned rent revenue	33330
	Rent revenue		3333
	[being revenue earned for 1 month]20000/6
h	Service revenue	6400
	Unearned service revenue		6400
	[being revenue not earned for period 1 jan 2017 -30april 2017 ][19200*4/12]6400
i	Bad debt expense	5250
	Allowance for uncollectible account		5250
	[Being amount deemed uncollectible recorded]

**Principal amount of note not given

**Rent revenue received in part g is not provided