Adjusting Entries Reynolds Computer Service offers data processing services to retafl clothing stores. The following data have been collected to aid in the preparation of adjusting entries for Reynolds Computer Service for the current year: a. Computer equipment was purchased from IBM 3 years ago at a cost of $540,000. Annual depreciation is $133,000. b. A fire insurance policy for a 2-year period beginning on September 1 was purchased from Good Hands Insurance Company for $12,840 cash. The entire amount of the prepayment was debited to prepaid insurance. (Assume that the beginning balance of prepaid insurance was $0 and that there were no other debits or credits to that account during the year.) c. Reynolds has a contract to perform the payroll accounting for Dayton's Department Stores. On December 31, $5,680 of services have been performed under this contract but are unbilled. d. Reynolds rents 12 computer terminals for $61 per month per terminal from Extreme Terminals Inc. At December 31, Reynolds owes Extreme Terminals for half a month's rent on each terminal. The amount owed is unrecorded. e. Perry's Tax Service prepays rent for time on Reynolds' computer. When payments are received from Perry's Tax Service, Reynolds credits unearned rent revenue. At December 31, Reynolds has earned $1,790 for computer time used by Perry's Tax Service during December. Required: 1. Prepare adjusting entries for each of the transactions. If an amount box does not require an entry, leave it blank.
Adjusting Entries Reynolds Computer Service offers data processing services to retafl clothing stores. The following data have been collected to aid in the preparation of adjusting entries for Reynolds Computer Service for the current year: a. Computer equipment was purchased from IBM 3 years ago at a cost of $540,000. Annual depreciation is $133,000. b. A fire insurance policy for a 2-year period beginning on September 1 was purchased from Good Hands Insurance Company for $12,840 cash. The entire amount of the prepayment was debited to prepaid insurance. (Assume that the beginning balance of prepaid insurance was $0 and that there were no other debits or credits to that account during the year.) c. Reynolds has a contract to perform the payroll accounting for Dayton's Department Stores. On December 31, $5,680 of services have been performed under this contract but are unbilled. d. Reynolds rents 12 computer terminals for $61 per month per terminal from Extreme Terminals Inc. At December 31, Reynolds owes Extreme Terminals for half a month's rent on each terminal. The amount owed is unrecorded. e. Perry's Tax Service prepays rent for time on Reynolds' computer. When payments are received from Perry's Tax Service, Reynolds credits unearned rent revenue. At December 31, Reynolds has earned $1,790 for computer time used by Perry's Tax Service during December. Required: 1. Prepare adjusting entries for each of the transactions. If an amount box does not require an entry, leave it blank.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Illinois State University : ACC 131 001 FA2021 - Financial Accounting : Gr..
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Adjusting Entries
Reynolds Computer Service offers data processing services to retafl clothing stores. The following data have been collected to aid in the preparation of adjusting entries
for Reynolds Computer Service for the current year:
a. Computer equipment was purchased from IBM 3 years ago at a cost of $540,000. Annual depreciation is $133,000.
b. A fire insurance policy for a 2-year period beginning on September 1 was purchased from Good Hands Insurance Company for $12,840 cash. The entire amount of the
prepayment was debited to prepaid insurance. (Assume that the beginning balance of prepaid insurance was $0 and that there were no other debits or credits to that
account during the year.)
c. Reynolds has a contract to perform the payroll accounting for Dayton's Department Stores. On December 31, $5,680 of services have been performed under this
contract but are unbilled.
d. Reynolds rents 12 computer terminals for $61 per month per terminal from Extreme Terminals Inc. At December 31, Reynolds owes Extreme Terminals for half a
month's rent on each terminal. The amount owed is unrecorded.
e. Perry's Tax Service prepays rent for time on Reynolds' computer. When payments are received from Perry's Tax Service, Reynolds credits unearned rent revenue. At
December 31, Reynolds has earned $1,790 for computer time used by Perry's Tax Service during December.
Required:
1. Prepare adjusting entries for each of the transactions. If an amount box does not require an entry, leave it blank.
a.
Dec. 31 Depreciation Expense v
Accumulated Depreciation v
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b.
Insurance Expense v
Dec. 31
Prepaid Insurance
Ne
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Transcribed Image Text:Feedback
Accounts Receivable v
88
Dec. 31
Service Revenue v
Feedback
V Check My Work
1c. Service revenue is an accrued revenue that has been earned but for which no cash has yet been received.
d.
88
Dec. 31 Rent Expense v
Rent Payable v
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e.
Unearned Rent Revenue v
Dec. 31
Rent Revenue v
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