The Georgia Gun Club adjusts its accounts monthly and closes its accounts annually. Club mem-bers pay their annual dues in advance by January 4. The entire amount is initially credited to Unearned Membership Dues. At the end of each month, an appropriate portion of this amountis credited to Membership Dues Earned. Guests of the club normally pay their fees before beingallowed to use the facilities. The amounts collected are credited to Guest Fee Revenue at the timeof receipt. Certain guests, however, are billed at the end of the month. The following informationis available as a source for preparing adjusting entries at December 31:1. Salaries earned by the club’s employees that have not yet been recorded or paid amount to $13,600.2. The Georgia State Police used the club’s facilities for target practice on December 30 of thecurrent year. At December 31, the $3,200 owed by the state police for guest fees had not yetbeen recorded or billed.3. Membership dues earned in December, for collections received at the beginning of the year,amount to $140,000.4. Depreciation of the furniture and fixtures in the clubhouse is based on an estimated life of eightyears. These items had originally been purchased for $120,000. The straight-line method is used.( Note: The clubhouse building was constructed in 1956 and is fully depreciated.)5. A 12-month bank loan in the amount of $60,000 had been obtained by the club on October 4.Interest is computed at an annual rate of 8 percent. The entire $60,000, plus all of the interestaccrued over the 12-month life of the loan, is due in full on September 30 of the upcomingyear. The necessary adjusting entry was made on November 30 to record the first two monthsof accrued interest expense. However, no adjustment has been made to record interest expenseaccrued in December.6. A one-year property insurance policy had been purchased on April 30. The entire premium of$10,800 was initially recorded as Unexpired Insurance.7. In December, the club entered into an agreement to host the annual tournament of the GeorgiaJunior Rifle Association. The club expects to generate guest fees of $7,200 from this event.8. Unrecorded Income Taxes Expense accrued in December amounts to $12,600. This amountwill not be paid until January 22.Instructionsa. For each of the above numbered paragraphs, prepare the necessary adjusting entry (includingan explanation). If no adjusting entry is required, explain why.b. Four types of adjusting entries are described at the beginning of the chapter. Using thesedescriptions, identify the type of each adjusting entry prepared in part a above.c. Although the clubhouse building is fully depreciated, it is in excellent physical condition.Explain how this can be.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The Georgia Gun Club adjusts its accounts monthly and closes its accounts annually. Club mem-
bers pay their annual dues in advance by January 4. The entire amount is initially credited to
Unearned Membership Dues. At the end of each month, an appropriate portion of this amount
is credited to Membership Dues Earned. Guests of the club normally pay their fees before being
allowed to use the facilities. The amounts collected are credited to Guest Fee Revenue at the time
of receipt. Certain guests, however, are billed at the end of the month. The following information
is available as a source for preparing
1. Salaries earned by the club’s employees that have not yet been recorded or paid amount to $13,600.
2. The Georgia State Police used the club’s facilities for target practice on December 30 of the
current year. At December 31, the $3,200 owed by the state police for guest fees had not yet
been recorded or billed.
3. Membership dues earned in December, for collections received at the beginning of the year,
amount to $140,000.
4.
years. These items had originally been purchased for $120,000. The straight-line method is used.
( Note: The clubhouse building was constructed in 1956 and is fully depreciated.)
5. A 12-month bank loan in the amount of $60,000 had been obtained by the club on October 4.
Interest is computed at an annual rate of 8 percent. The entire $60,000, plus all of the interest
accrued over the 12-month life of the loan, is due in full on September 30 of the upcoming
year. The necessary adjusting entry was made on November 30 to record the first two months
of accrued interest expense. However, no adjustment has been made to record interest expense
accrued in December.
6. A one-year property insurance policy had been purchased on April 30. The entire premium of
$10,800 was initially recorded as Unexpired Insurance.
7. In December, the club entered into an agreement to host the annual tournament of the Georgia
Junior Rifle Association. The club expects to generate guest fees of $7,200 from this event.
8. Unrecorded Income Taxes Expense accrued in December amounts to $12,600. This amount
will not be paid until January 22.
Instructions
a. For each of the above numbered paragraphs, prepare the necessary adjusting entry (including
an explanation). If no adjusting entry is required, explain why.
b. Four types of adjusting entries are described at the beginning of the chapter. Using these
descriptions, identify the type of each adjusting entry prepared in part a above.
c. Although the clubhouse building is fully depreciated, it is in excellent physical condition.
Explain how this can be.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 10 images
