Allentown Services Inc. is preparing adjusting entries for the year ending December 31, 2019.The following data are available:a. Interest is owed at December 31, 2019, on a 6-month, 8% note. Allentown borrowed$120,000 from NBD on September 1, 2019.b. Allentown provides daily building maintenance services to Mack Trucks for a quarterly feeof $2,700 payable on the fifteenth of the month following the end of each quarter. No entrieshave been made for the services provided to Mack Trucks during the quarter ended December31, and the related bill will not be sent until January 15, 2020.c. At the beginning of 2019, the cost of office supplies on hand was $1,220. During 2019, officesupplies with a total cost of $6,480 were purchased from Office Depot and debited to officesupplies inventory. On December 31, 2019, Allentown determined the cost of office supplieson hand to be $970.d. On September 23, 2019, Allentown received a $7,650 payment from Bethlehem Steel for9 months of maintenance services beginning on October 1, 2019. The entire amount wascredited to unearned service revenue when received.Required:1. Prepare the appropriate adjusting entries at December 31, 2019.2. CONCEPTUAL CONNECTION What would be the effect on the balance sheet and theincome statement if the accountant failed to make the above adjusting entries?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Allentown Services Inc. is preparing adjusting entries for the year ending December 31, 2019.
The following data are available:
a. Interest is owed at December 31, 2019, on a 6-month, 8% note. Allentown borrowed
$120,000 from NBD on September 1, 2019.
b. Allentown provides daily building maintenance services to Mack Trucks for a quarterly fee
of $2,700 payable on the fifteenth of the month following the end of each quarter. No entries
have been made for the services provided to Mack Trucks during the quarter ended December
31, and the related bill will not be sent until January 15, 2020.
c. At the beginning of 2019, the cost of office supplies on hand was $1,220. During 2019, office
supplies with a total cost of $6,480 were purchased from Office Depot and debited to office
supplies inventory. On December 31, 2019, Allentown determined the cost of office supplies
on hand to be $970.
d. On September 23, 2019, Allentown received a $7,650 payment from Bethlehem Steel for
9 months of maintenance services beginning on October 1, 2019. The entire amount was
credited to unearned service revenue when received.
Required:
1. Prepare the appropriate adjusting entries at December 31, 2019.
2. CONCEPTUAL CONNECTION What would be the effect on the balance sheet and the
income statement if the accountant failed to make the above adjusting entries?

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