P3-59A. (Learning Objective 3: Adjust the accounts) Journalize the adjusting entry neededon December 31, the end of the current accounting period, for each of the following independent cases affecting Castaway Corporation. Include an explanation for each entry.a. The details of Prepaid Insurance are as follows:Prepaid Insurance2,9004,000JanMar 311 BalCastaway prepays insurance on March 31 each year. At December 31, $1,700 is still prepaid.b. Castaway pays employees each Friday. The amount of the weekly payroll is $6,100 fora five-day work week. The current accounting period ends on a Wednesday.c. Castaway has a note receivable. During the current year, Castaway has earned accruedinterest revenue of $700 that it will collect next year.d. The beginning balance of supplies was $3,000. During the year, Castaway purchasedsupplies costing $6,200, and at December 31 supplies on hand total $2,200.e. Castaway is providing services for Blue Whale Investments, and the owner of BlueWhale paid Castaway an annual service fee of $10,500. Castaway recorded this amountas Unearned Service Revenue. Castaway estimates that it has earned 60% of the totalfee during the current year.f. Depreciation for the current year includes Office Furniture, $3,800, and Equipment, $5,400.
P3-59A. (Learning Objective 3: Adjust the accounts) Journalize the
on December 31, the end of the current accounting period, for each of the following independent cases affecting Castaway Corporation. Include an explanation for each entry.
a. The details of Prepaid Insurance are as follows:
Prepaid Insurance
2,900
4,000
Jan
Mar 31
1 Bal
Castaway prepays insurance on March 31 each year. At December 31, $1,700 is still prepaid.
b. Castaway pays employees each Friday. The amount of the weekly payroll is $6,100 for
a five-day work week. The current accounting period ends on a Wednesday.
c. Castaway has a note receivable. During the current year, Castaway has earned accrued
interest revenue of $700 that it will collect next year.
d. The beginning balance of supplies was $3,000. During the year, Castaway purchased
supplies costing $6,200, and at December 31 supplies on hand total $2,200.
e. Castaway is providing services for Blue Whale Investments, and the owner of Blue
Whale paid Castaway an annual service fee of $10,500. Castaway recorded this amount
as Unearned Service Revenue. Castaway estimates that it has earned 60% of the total
fee during the current year.
f.
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