E3-16 Colin Mochrie Company has the following balances in selected accounts on D
ID: 2345267 • Letter: E
Question
E3-16Colin Mochrie Company has the following balances in selected accounts on December 31, 2012.
Consulting Revenue $40,000
Insurance Expense 2,100
Supplies Expense 2,450
All the accounts have normal balances. Colin Mochrie Company debits prepayments to expense accounts when paid, and credits unearned revenues to revenue accounts when received. The following information below has been gathered at December 31, 2012.
Colin Mochrie Company paid $2,100 for 12 months of insurance coverage on June 1, 2012.
On December 1, 2012, Colin Mochrie Company collected $40,000 for consulting services to be performed from December 1, 2012, through March 31, 2013.
A count of supplies on December 31, 2012, indicates that supplies of $800 are on hand.
Instructions
Prepare the adjusting entries needed at December 31, 2012.
Account/Description Debit Credit
1.
2.
3.
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Explanation / Answer
1. Colin Mochrie Company paid $2,100 for 12 months of insurance coverage on May 1, 2008 (i.e. 4 mths prepaid) Dr Prepaid insurance $700 ($2,100 x 4/12) Cr Insurance expense $700 2. On December 1, 2008, Colin Mochrie Company collected $36,000 for consulting services to be performed from December 1, 2008, through March 31, 2009 (i.e. 3 mths unearned) Dr Consulting Revenue $27,000 ($36,000 x 3/4) Cr unearned revenues $27,000 3. A count of supplies on December 31, 2008, indicates that supplies of $850 are on hand Dr Supplies $850 Cr Supplies expense $850 Colin Mochrie Company has the following balances in selected accounts on December 31, 2008. Consulting Revenue $36,000 Insurance Expense 2,100 Supplies Expense 2,550 All the accounts have normal balances. Colin Mochrie Company debits prepayments to expense accounts when paid, and credits unearned revenues to revenue accounts when received. The following information below has been gathered at December 31, 2008. 1. Colin Mochrie Company paid $2,100 for 12 months of insurance coverage on May 1, 2008. 2. On December 1, 2008, Colin Mochrie Company collected $36,000 for consulting services to be performed from December 1, 2008, through March 31, 2009. 3. A count of supplies on December 31, 2008, indicates that supplies of $850 are on hand.
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