Question

Make adjusting entries for December 31, 2017 for the following transactions. (Assume a single adjusting entry is made each of the following at year end December 31, 2017).

A XX Company purchased a fire insurance policy for 2 years coverage on November 1, 2017 for $20000.

B XX Company received $30000 from YY Company on January 1, 2017 in payment in advance for advising services to be provided for 2 years from the inception of the contract.

C XX purchases a bond on August 1, 2017 with a face value of $24,000 that pays 12 percent interest each year. Interest is paid on the bond semiannually.

D XX pays wages of $25,000 each week for 5 days work (Monday through Friday). December 31 in 2016 was a Tuesday.

Answer 1

	Journal Entries
	Date	Account Title	Dr $	Cr $
A	31-12-2017	Prepaid Insurance (20,000 * 2/24 months )	$               1,666.67
		Insurance Expense		$           1,666.67
		(To record insurance expense )
B	31-12-2017	Unearned Revenue (30000/2*1)	$             15,000.00
		Revenue Income		$        15,000.00
		(To record revenue earned )
C.	31-12-2017	Interest Receivable (24000*12%*5/12)	$               1,200.00
		Interest Revenue		$           1,200.00
		(To record interest revenue earned )
D.	31-12-2017	Wages Expense	$             15,000.00
		Wages payable (25000/5 days * 3 days )		$        15,000.00
		(To record outstanding wages )

* If December 31 , 2016 is tuesday then December 31, 2017 will be Wednesday.

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