Required 1. Complete the six-column table by entering adjustments that reflect t

Question

Required

1. Complete the six-column table by entering adjustments that reflect the following information:

a. As of December 31, 2005, employees had earned $900 of unpaid and unrecorded salaries. The

next payday is January 4, at which time $1,600 of salaries will be paid.

b. The cost of supplies still available at December 31, 2005, is $2,700.

c. The notes payable requires an interest payment to be made every three months. The amount

of unrecorded accrued interest at December 31, 2005, is $1,250. The next interest payment,

at an amount of $1,500, is due on January 15, 2006.

d. Analysis of the unearned member fees account shows $5,600 remaining unearned at December

31, 2005.

e. In addition to the member fees included in the revenue account balance, the company has earned

another $9,100 in unrecorded fees that will be collected on January 31, 2006. The company

is also expected to collect $8,000 on that same day for new fees earned in January 2006.

f. Depreciation expense for the year is $12,500.

2. Prepare journal entries for the adjustments entered in the six-column table for part 1.

3. Prepare journal entries to reverse the effects of the adjusting entries that involve accruals.

4. Prepare journal entries to record the cash payments and cash collections described for January.

Explanation / Answer

. As of December 31, 2005, employees had earned $900 of unpaid and unrecorded salaries. The next payday is January 4, at which time $1,600 of salaries will be paid. Adjustment Dr Salaries Expense 900 Cr Salaries Payable 900 Reversing Dr Salaries Payable 900 Cr Salaries Expense 900 Payment Dr Salaries Expense 1,600 Cr Cash 1,600 =================================================================================== b. The cost of supplies still available at December 31, 2005, is $2,700. 5,500 - 2,700 = 2,800 Adjusting Dr Supplies Expense 2,800 Cr Supplies 2,800 No reversing c. The notes payable requires an interest payment to be made every three months. The amount of unrecorded accrued interest at December 31, 2005, is $1,250. The next interest payment, at an amount of $1,500, is due on January 15, 2006. Adjusting Dr Interest Expense 1,250 Cr Interest Payable 1,250 Reversing Dr Interest Payable 1,250 Cr Interest 1,250 Payment Dr Interest Expense 1,500 Cr Cash 1,500 =============================================================================== d. Analysis of the unearned member fees account shows $5,600 remaining unearned at December 31, 2005. 14,000 - 5,600 = 8,400 Adjusting Dr Unearned Member Fees 8,400 Cr Member Fees Earned 8,400 No reversing or payment entries =========================================================================================== e. In addition to the member fees included in the revenue account balance, the company has earned another $9,100 in unrecorded fees that will be collected on January 31, 2006. The company is also expected to collect $8,000 on that same day for new fees earned in January 2006. Adjustment Dr Accounts Receivable 9,100 Cr Member Fees Earned 9,100 Reversing Dr Member Fees Earned 9,100 Cr Accounts Receivable Cash Collection Dr Cash 17,100 Cr Member Fees Earned 17,100 ================================================================================== f. depreciation expense for the year is $12,500. Adjustment Dr depreciation expense 12,500 Cr Accumulated Depreciation 12,500 No reversing or payment entries

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