Chateau Corporation has reported pre-tax income of $250,000 on December 31, 2021, before considering the transactions and events noted below. Prepare the adjusting entries needed at December 31, 2021 in order to correctly report Chateau's pre-tax income for the year. On September 1, 2021, Chateau signed a one-year, $36,000 note payable with interest of 7%. The note, plus accrued interest, is due on August 31, 2022.On May 31, 2021, Chateau entered into a contract to provide services to a customer for eighteen months, beginning on June 1. The customer paid the $27,000 fee in full on June 1, and Chateau recorded the payment as unearned revenue.On August 1, 2021, Chateau paid a year's rent in advance on a storage facility and debited the $48,000 payment to Prepaid Rent.Depreciation on office equipment is $18,000.The December utilities bill had not been received as of December 31. The company has equalized billing for its utilities, and each month's bill is $950.

The adjustment entries are prepared to adjust the revenues and expenses of the current period.

Answered: Chateau Corporation has reported…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Chateau Corporation has reported pre-tax income of $250,000 on December 31, 2021, before considering the transactions and events noted below. Prepare the adjusting entries needed at December 31, 2021 in order to correctly report Chateau's pre-tax income for the year.

On September 1, 2021, Chateau signed a one-year, $36,000 note payable with interest of 7%. The note, plus accrued interest, is due on August 31, 2022.
On May 31, 2021, Chateau entered into a contract to provide services to a customer for eighteen months, beginning on June 1. The customer paid the $27,000 fee in full on June 1, and Chateau recorded the payment as unearned revenue.
On August 1, 2021, Chateau paid a year's rent in advance on a storage facility and debited the $48,000 payment to Prepaid Rent.
Depreciation on office equipment is $18,000.
The December utilities bill had not been received as of December 31. The company has equalized billing for its utilities, and each month's bill is $950.

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