The following information relates to Fanning’s Electronics on December 31, 2011. The company, which uses the calendar year as its annual reporting period, initially records prepaid and unearned items in balance sheet accounts (assets and liabilities, respectively). The company’s weekly payroll is $8,750, paid each Friday for a five-day workweek. Assume December 31, 2011, fall on a Monday, but the employees will not be paid their wages until Friday, January 4, 2012. Eighteen months earlier, on July 1, 2010, the company purchased equipment that cost $20,000. Its useful life is predicted to be five years, at which time the equipment is expected to be worthless (zero salvage value). On October 1, 2011, the company agreed to work on a new housing development. The company is paid $120,000 on October 1 in advance of future installation of similar alarm system in 24 new homes. That amount was credit to the Unearned Services Revenue account. Between October 1 and December 31, work on 20 homes was completed. On September 1, 2011, the company purchased a 12-month insurance policy for $1,800. The transaction was recorded with an $1,800 DEBIT TO Prepaid Insurance. On December 29, 2011, the company completed a $ 7,000 service that has not been billed and not recorded as of December 31, 2011. Required Prepare any necessary adjusting entries on December 31, 2011, in relation to transaction and events a through e.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

The following information relates to Fanning’s Electronics on December 31, 2011. The company, which uses the calendar year as its annual reporting period, initially records prepaid and unearned items in balance sheet accounts (assets and liabilities, respectively).

The company’s weekly payroll is $8,750, paid each Friday for a five-day workweek. Assume December 31, 2011, fall on a Monday, but the employees will not be paid their wages until Friday, January 4, 2012.
Eighteen months earlier, on July 1, 2010, the company purchased equipment that cost $20,000. Its useful life is predicted to be five years, at which time the equipment is expected to be worthless (zero salvage value).
On October 1, 2011, the company agreed to work on a new housing development. The company is paid $120,000 on October 1 in advance of future installation of similar alarm system in 24 new homes. That amount was credit to the Unearned Services Revenue account. Between October 1 and December 31, work on 20 homes was completed.
On September 1, 2011, the company purchased a 12-month insurance policy for $1,800. The transaction was recorded with an $1,800 DEBIT TO Prepaid Insurance.
On December 29, 2011, the company completed a $ 7,000 service that has not been billed and not recorded as of December 31, 2011.

Required

Prepare any necessary adjusting entries on December 31, 2011, in relation to transaction and events a through e.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions