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    Quiz 3 Adjusting Entries Sec B

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    Here are the adjusting entries required based on the information provided: 1. Record unbilled studio revenue of $7,200 Debit: Studio Revenue Earned $7,200 Credit: Unearned Studio Revenue $7,200 2. Adjust supplies inventory to $3,000 Debit: Supplies Expense $400 Credit: Studio Supplies $400 3. Allocate 6 months of insurance premium Debit: Insurance Expense $600 Credit: Unexpired Insurance $600 4. Allocate 4 months of prepaid rent Debit: Studio Rent Expense $4,000 Credit: Prepaid Studio Rent $

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    Quiz 3 Adjusting Entries Sec B

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    Here are the adjusting entries required based on the information provided: 1. Record unbilled studio revenue of $7,200 Debit: Studio Revenue Earned $7,200 Credit: Unearned Studio Revenue $7,200 2. Adjust supplies inventory to $3,000 Debit: Supplies Expense $400 Credit: Studio Supplies $400 3. Allocate 6 months of insurance premium Debit: Insurance Expense $600 Credit: Unexpired Insurance $600 4. Allocate 4 months of prepaid rent Debit: Studio Rent Expense $4,000 Credit: Prepaid Studio Rent $

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    Quiz 3 Adjusting Entries Sec B (1)

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    Here are the adjusting entries required based on the information provided: 1. Record unbilled studio revenue of $7,200 Debit: Studio Revenue Earned $7,200 Credit: Unearned Studio Revenue $7,200 2. Adjust supplies inventory to $3,000 Debit: Supplies Expense $400 Credit: Studio Supplies $400 3. Allocate 6 months of insurance premium Debit: Insurance Expense $600 Credit: Unexpired Insurance $600 4. Allocate 4 months of prepaid rent Debit: Studio Rent Expense $4,000 Credit: Prepaid Studio Rent $

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    32 views3 pages

    Quiz 3 Adjusting Entries Sec B

    Uploaded by

    Home Phone
    Here are the adjusting entries required based on the information provided: 1. Record unbilled studio revenue of $7,200 Debit: Studio Revenue Earned $7,200 Credit: Unearned Studio Revenue $7,200 2. Adjust supplies inventory to $3,000 Debit: Supplies Expense $400 Credit: Studio Supplies $400 3. Allocate 6 months of insurance premium Debit: Insurance Expense $600 Credit: Unexpired Insurance $600 4. Allocate 4 months of prepaid rent Debit: Studio Rent Expense $4,000 Credit: Prepaid Studio Rent $

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    QUIZ NO: 02 Adjusting Entries

    Question 1: Preparing Adjusting Entries


    Allison Collins, Inc. is a small photography studio in Hartford. Photographers use the studio to
    make high quality photos. New clients are required to pay in advance for studio services.
    Photographers with established credit are billed for studio services at the end of each month.
    Adjusting entries are performed on a monthly basis. An unadjusted trial balance dated
    December 31, 2002, follows. (Bear in mind that adjusting entries already have been made for
    the first eleven months of 2002, but not for December.)

    ALLISON COLLINS, INC.


    Unadjusted Trial Balance
    December 31, 2002

    Cash........................................................................................$ 27,000
    Accounts receivable............................................................... 62,000
    Studio supplies....................................................................... 3,400
    Unexpired insurance.............................................................. 700
    Prepaid studio rent................................................................ 5,000
    Filming equipment................................................................. 120,000
    Accumulated depreciation: filming equipment..................... $ 40,000
    Notes payable........................................................................ 20,000
    Interest payable..................................................................... 400
    Income taxes payable............................................................ 2,000
    Unearned studio revenue...................................................... 10,400
    Capital stock........................................................................... 60,000
    Retained earnings.................................................................. 45,200
    Studio revenue earned.......................................................... 115,000
    Salaries expense..................................................................... 16,000
    Supplies expense.................................................................... 800
    Insurance expense................................................................. 1,100
    Depreciation expense: filming equipment............................ 22,000
    Studio rent expense............................................................... 20,000
    Interest expense.................................................................... 400
    Utilities expense..................................................................... 2,600
    Income taxes expense............................................................ 12,000 ________
    $293,000 $293,000
    Other Data
    1. Records show that $7,200 in studio revenue had not yet been billed or recorded as of
    December 31.
    2. Studio supplies on hand at December 31 amount to $3,000.
    3. On June 1, 2002, the studio purchased a one-year insurance policy for $1,200. The
    entire premium was initially debited to Unexpired Insurance.
    4. The studio is located in a rented building. On November 1, 2002, the studio paid $6,000
    rent in advance for six months. The entire amount was debited to Prepaid Studio Rent.
    5. The useful life of the studio’s recording equipment is estimated to be five years (or 60
    months). The straight-line method of depreciation is used.
    6. On September 1, 2002, the studio borrowed $20,000 by signing a 12-month, 12% note
    payable to First Federal Bank of Hartford. The entire $20,000 plus 12 months’ interest is
    due in full on August 31, 2003.
    7. Records show that $4,200 of cash receipts originally recorded as Unearned Studio
    Revenue had been earned as of December 31.
    8. Salaries earned by recording technicians that remain unpaid at December 31 amount to
    $600.
    9. The studio’s accountant estimates that income taxes expense for the entire year ended
    December 31, 2002, is $15,000. (Note that $12,000 of this amount has already been
    recorded.)

    Instructions
    a. For each of the numbered paragraphs, prepare the necessary adjusting entry (including
    and explanation). If no adjusting entry is required, explain why.
    b. Using figures from the company’s unadjusted trial balance in conjunction with the
    adjusting entries made in part a, compute net income for the year ended December 31,
    2002.
    c. Was the studio’s monthly rent for the last 2 months of 2002 more or less than during
    the first 10 months of the year? Explain your answer.

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