Johnson\'s Boat Yard, Inc., is completing the accounting process for the year ju
ID: 2351508 • Letter: J
Question
Johnson's Boat Yard, Inc., is completing the accounting process for the year just ended, November 30, 2010. The transactions during 2010 have been journalized and posted. The following data with respect to adjusting entires are available: a. Johnson's winterized (cleaned and covered) three boats for customers at the end of November, but did not record the service for $2,100. b. The Carter family paid Johnson's $3,000 on November 1, 2010, to store their sailboat for the winter until May 1, 2011. Johnson's credited the full amount to Unearned Storage Revenue on November 1. c. Wages earned by employees during November 2010, unpaid and unrecorded at November 30, 2010, amounted to $2,800. The next payroll date will be December 5, 2010. d. On October 1, 2010, Johnson's paid $1,200 to the local newspaper for an advertisement to run every Thursday for 12 weeks. All ads have been run except for three Thursdays in December to complete the 12-week contract. e. Johnson's used boat-lifting equipment that cost $200,000; $20,000 was the estimated depreciation for 2010. f. Boat repair supplies on hand at December 1, 2009, totaled $15,500. Repair supplies purchased and debited to supplies during the year amounted to $46,000. THe year-end count showed $12,400 of the supplies on hand. g. Johnson's borrowed $150,000 at a 12 percent annual interest rate on April 1,2010, the expand its boat storage facility. The loan requires Johnson's to pay the interest quarterly until the note is repaid in three years. Johnson's paid quarterly interest on July 1 and October 1. Required: 1. Identify each of these transactions as an unearned revenue, prepaid expense, accrued revenue, or accrued expense. 2. Record the adjusting entry than should be recorded for Johnson's at November 30, 2010.Explanation / Answer
a. Johnson's winterized (cleaned and covered) three boats for customers at the end of November, but did not record the service for $2,100. Accrued revenue Debit: Accounts receivable 2100 Credit: Service revenue 2100 b. The Carter family paid Johnson's $3,000 on November 1, 2010, to store their sailboat for the winter until May 1, 2011. Johnson's credited the full amount to Unearned Storage Revenue on November 1. Unearned revenue Debit: Unearned storage revenue 500 Debit: Storage revenue 500 (3,000*1 month/6 months) c. Wages earned by employees during November 2010, unpaid and unrecorded at November 30, 2010, amounted to $2,800. The next payroll date will be December 5, 2010. Accrued expense Debit: Wages expense 2800 Credit: wages payable 2800 d. On October 1, 2010, Johnson's paid $1,200 to the local newspaper for an advertisement to run every Thursday for 12 weeks. All ads have been run except for three Thursdays in December to complete the 12-week contract. Prepaid expense Debit: advertising expense 900 Credit: prepaid advertising 900 (1,200*9 weeks/12 weeks) e. Johnson's used boat-lifting equipment that cost $200,000; $20,000 was the estimated depreciation for 2010. prepaid expense Debit: depreciation expense 20,000 Credit: accumulated depreciation 20,000 f. Boat repair supplies on hand at December 1, 2009, totaled $15,500. Repair supplies purchased and debited to supplies during the year amounted to $46,000. THe year-end count showed $12,400 of the supplies on hand. Prepaid expense Debit: supplies expense 49,100 Credit: supplies 49,100 (15,500 + 46,000 – 12,400) g. Johnson's borrowed $150,000 at a 12 percent annual interest rate on April 1,2010, the expand its boat storage facility. The loan requires Johnson's to pay the interest quarterly until the note is repaid in three years. Johnson's paid quarterly interest on July 1 and October 1. Accrued expense Debit interest expense 3,000 Credit: interest payable 3,000 (150,000*.12*2 months/12 months) Required: 1. Identify each of these transactions as an unearned revenue, prepaid expense, accrued revenue, or accrued expense. 2. Record the adjusting entry than should be recorded for Johnson's at November 30, 2010.
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