The Jamesway Corporation had the following situations on December 2013. On Decem
ID: 2377580 • Letter: T
Question
The Jamesway Corporation had the following situations on December 2013.
On December 20, 2013, Jamesway received a $5,600 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 $5,200 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 $90,000 from a local bank. A note was signed with principal and 9% interest to be paid on August 31, 2014.
Prepare the necessary adjusting entries at its year-end of December 31, 2013. No adjusting entries were made during the year.
On December 20, 2013, Jamesway received a $5,600 payment from a customer for services to be rendered early in 2014. Service revenue was credited.
2.On December 1, 2013, the company paid a local radio station $5,200 for 40 radio ads that were to be aired, 20 per month, throughout December and January. Prepaid advertising was debited.
3. Employee salaries for the month of December totaling $32,000 will be paid on January 7, 2014. 4.On August 31, 2013, Jamesway borrowed $90,000 from a local bank. A note was signed with principal and 9% interest to be paid on August 31, 2014.
Explanation / Answer
1.On December 20, 2013, Jamesway received a $5600 payment from a customer for services to be rendered early in 2014. Service revenue was credited.
The missing entry is:
Debit Service Revenue $5600
Credit Deferred Service Revenue $5600
Result is:
Liabilities too low by $5600
Equity too high by $5600
2.On December 1, 2013, the company paid a local radio station $5200 for 40 radio ads that were to be aired, 20 per month, throughout December and January. Prepaid advertising was debited.
The missing entry is:
Debit Advertising Expense $2600
Credit Prepaid Advertising $2600
Result is:
Assets too high by $2600
Equity too high by $2600
3.Employee salaries for the month of December totaling $32000 will be paid on January 7, 2014.
The missing Entry is:
Debit Salaries Expense $32,000
Credit Accrued Payroll $32,000
Result is:
Liabilities too low by $32,000
Equity too high by $32,000
4.On August 31, 2013, Jamesway borrowed $90,000 from a local bank. A note was signed with principal and 9% interest to be paid on August 31, 2014.
The missing entry is:
Debit Interest Expense $3000
Credit Accrued Interest Payable $3000
Result is:
Liabilities too low by $3000
Equity too high by $3000
Assets higher by $2600
Liabilities lower by $40600
Shareholders equity higher by $43200
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