Chapter 3, Problem 3.67BP

LO 3

(Learning Objective 3: Adjust the accounts) Journalize the adjusting entry needed on December 31, the end of the current accounting period, for each of the following independent cases affecting Rowling Corp. Include an explanation for each entry.

1. a. The details of Prepaid Insurance are as follows:

Prepaid Insurance
|Jan 1 Bal 2, 100
Mar 31     3,300

Rowling prepays Insurance on March 31 each year. At December 31, $200 Is still prepaid.

1. b. Rowling pays employees each Friday. The amount of the weekly payroll is $5,930 for a five-day work week. The current accounting period ends on Monday.
2. c. Rowling has a note receivable. During the current year, Rowling has earned accrued interest revenue of $400 that it will collect next year
3. d. The beginning balance of supplies was $2,700. During the year, Rowling purchased supplies costing $6,400, and at December 31 supplies on hand total $2,100.
4. e. Rowling is providing services for Lion Investments, and the owner of Lion paid Rowling an annual service fee of $10,600. Rowling recorded this amount as Unearned Service Revenue. Rowling estimates that it has earned 70% of the total fee during the current year.
5. f. Depreciation for the current year induces Office Furniture, $3,400, and Equipment, $6,100.