On December 20, 2013, Jamesway received a $4,100 payment from a customer for ser
ID: 2377323 • Letter: O
Question
On December 20, 2013, Jamesway received a $4,100 payment from a customer for services to be rendered early in 2014. Service revenue was credited.
On December 1, 2013, the company paid a local radio station $2,200 for 40 radio ads that were to be aired, 20 per month, throughout December and January. Prepaid advertising was debited.
On August 31, 2013, Jamesway borrowed $50,000 from a local bank. A note was signed with principal and 6% interest to be paid on August 31, 2014.
If none of the adjusting journal entries were made, would assets, liabilities, and shareholders
The Jamesway Corporation had the following situations on December 2013.Explanation / Answer
1.On December 20, 2013, Jamesway received a $4,900 payment from a customer for services to be rendered early in 2014. Service revenue was credited.
The missing entry is:
Debit Service Revenue $4,100
Credit Deferred Service Revenue $4,100
Result is:
Liabilities too low by $4,100
Equity too high by $4,100
2.On December 1, 2013, the company paid a local radio station $2,200 for 30 radio ads that were to be aired, 15 per month, throughout December and January. Prepaid advertising was debited.
The missing entry is:
Debit Advertising Expense $1,100
Credit Prepaid Advertising $1,100
Result is:
Assets too high by $1,100
Equity too high by $1,100
3.Employee salaries for the month of December totaling $17,000 will be paid on January 7, 2012.
The missing Entry is:
Debit Salaries Expense $17,000
Credit Accrued Payroll $17,000
Result is:
Liabilities too low by $17,000
Equity too high by $17,000
4.On August 31, 2011, Jamesway borrowed $50,000 from a local bank. A note was signed with principal and 6% interest to be paid on August 31, 2012.
The missing entry is:
Debit Interest Expense $3,000
Credit Accrued Interest Payable $3,000
Result is:
Liabilities too low by $3,000
Equity too high by $3,000
Assets higher by $1,100
Liabilities lower by $24,100
Shareholders equity higher by $25,200
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