The following information relates to Gatsby, Inc. as of December 31 of the current year. The company uses the calendar year as its annual reporting period and the Accrual Method of Accounting. Prepaid and unearned items are recorded as assets and liabilities, respectively. Prepare all necessary adjusting journal entries and post to the T-accounts. 1 The company's weekly payroll is $3,000 and is paid each Friday for a five-day work week. Assume December 31st falls on a Thursday, but the employees will not be paid their wages until Friday, January 3rd. 2 Eighteen months earlier, on July 1st the company purchased equipment that cost $160,000. Its useful life is predicted to be ten years, at which time the equipment is expected to have a zero salvage/residual value. Gatsby, Inc. uses the straight-line depreciation method. Deprecation has NOT been recorded for this year. 3 On September 1st of the current year Gatsby, Inc. was paid $60,000 in advance of future installation of alarm systems in 4 new homes. The amount was credited to the Unearned Revenue-Alarms account. Between September 1st and December 31st alarm systems were installed in 2 homes, completing those jobs.

The following information relates to Gatsby, Inc. as of December 31 of the current year. The company uses the calendar year as its annual reporting period and the Accrual Method of Accounting. Prepaid and unearned items are recorded as assets and liabilities, respectively. Prepare all necessary adjusting journal entries and post to the T-accounts. 1 The company's weekly payroll is $3,000 and is paid each Friday for a five-day work week. Assume December 31st falls on a Thursday, but the employees will not be paid their wages until Friday, January 3rd. 2 Eighteen months earlier, on July 1st the company purchased equipment that cost $160,000. Its useful life is predicted to be ten years, at which time the equipment is expected to have a zero salvage/residual value. Gatsby, Inc. uses the straight-line depreciation method. Deprecation has NOT been recorded for this year. 3 On September 1st of the current year Gatsby, Inc. was paid $60,000 in advance of future installation of alarm systems in 4 new homes. The amount was credited to the Unearned Revenue-Alarms account. Between September 1st and December 31st alarm systems were installed in 2 homes, completing those jobs.

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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