Question

In: Accounting

Preparing Entries Across Two Periods The following selected accounts appear in Zimmerman Company's unadjusted trial balance...

Preparing Entries Across Two Periods
The following selected accounts appear in Zimmerman Company's unadjusted trial balance at December 31, 2015, the end of its fiscal year (all accounts have normal balances).

Prepaid Maintenance

$2,700

Supplies

8,400

Unearned Commission Fees

8,500

Commission Fees Earned

84,000

Rent Expense

10,800

Additional information is as follows.
1. On September 1, 2015, the company entered into a prepaid equipment maintenance contract. Zimmerman Company paid $2,700 to cover maintenance service for 6 months, beginning September 1, 2015. The $2,700 payment was debited to Prepaid Maintenance.
2. Supplies available on December 31 are $3,200.
3. Unearned commission fees at December 31 are $4,000.
4. Commission fees earned but not yet billed at December 31 are $2,800. (Hint: Debit Fees Receivable.)
5. Zimmerman Company's lease calls for rent of $900 per month payable on the first of each month, plus an annual amount equal to 1% of annual commissions earned. This additional rent is payable on January 10 of the following year. (Hint: Use the adjusted amount of commissions earned in computing the additional rent.)

Required

(a) Prepare Zimmerman Company's adjusting entries at December 31, 2015 using the financial statement effects template.

Balance Sheet

Transaction

Cash Asset

+

Noncash Assets

=

Liabilities

+

Contributed Capital

+

Earned Capital

(1) Recognize maintenance expense.

$Answer

+

$Answer

=

$Answer

+

$Answer

+

$Answer

(2) Recognize supplies expense.

Answer

+

Answer

=

Answer

+

Answer

+

Answer

(3) Accrue earned commissions.

Answer

+

Answer

=

Answer

+

Answer

+

Answer

(4) Earned but unbilled commission fees.

Answer

+

Answer

=

Answer

+

Answer

+

Answer

(5) Rent expense.

Answer

+

Answer

=

Answer

+

Answer

+

Answer

Income Statement


Revenue


-


Expenses


=


Net Income

$Answer

-

$Answer

=

$Answer

Answer

-

Answer

=

Answer

Answer

-

Answer

=

Answer

Answer

-

Answer

=

Answer

Answer

-

Answer

=

Answer

(b) Prepare entries on January 10, 2016, using both the financial statement effects template and in journal entry form, to record (1) the billing of $4,600 in commissions earned (which includes the $2,800 of commissions earned but not billed at December 31) and (2) the cash payment of the additional rent owed for 2015. (Hint for part (1): Zimmerman Company has two receivable accounts-- Fees Receivable is used for amounts earned, but not yet billed, and Accounts Receivable for amounts that are earned and billed to the customer.)

For the Noncash Assets answer, enter the net amount for the transaction.

Balance Sheet

Transaction

Cash Asset

+

Noncash Assets

=

Liabilities

+

Contributed Capital

+

Earned Capital

(1)

$Answer

+

$Answer

=

$Answer

+

$Answer

+

$Answer

(2)

Answer

+

Answer

=

Answer

+

Answer

+

Answer

Income Statement


Revenue


-


Expenses


=


Net Income

$Answer

-

$Answer

=

$Answer

Answer

-

Answer

=

Answer

Solutions

Expert Solution

Solution 1:

Balance Sheet Income Statement
Transaction Cash Asset + Noncash Assets = Liabilities + Contributed Capital + Earned Capital Revenue - Expenses = Net Income
(1) Recognize maintenance expense. + -$1,800.00 = + + -$1,800.00 - $1,800.00 = -$1,800.00
(2) Recognize supplies expense. + -$5,200.00 = + + -$5,200.00 - $5,200.00 = -$5,200.00
(3) Accrue earned commissions. + = -$4,500.00 + + $4,500.00 $4,500.00 - = $4,500.00
(4) Earned but unbilled commission fees. + $2,800.00 = + + $2,800.00 $2,800.00 - = $2,800.00
(5) Rent expense. + = $913.00 + + -$913.00 - $913.00 = -$913.00

Solution 2:

Balance Sheet Income Statement
Transaction Cash Asset + Noncash Assets = Liabilities + Contributed Capital + Earned Capital Revenue - Expenses = Net Income
(1) Commission Earned $1,800.00 $1,800.00 $1,800.00 $1,800.00
(2) Rent Payment -$913.00 -$913.00

ekkarill92 answered 1 year ago
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