1. On December 14 Bench Company received $3,700 cash for consulting services tha
ID: 2445483 • Letter: 1
Question
1. On December 14 Bench Company received $3,700 cash for consulting services that will be performed in January. Bench records all such prepayments in a liability account. Prepare a general journal entry to record the $3,700 cash receipt.
2. Complete the following by filling in the blanks:
(1) The Prepaid Insurance account had a $455 debit balance at the beginning of the current year; $650 of insurance premiums were paid during the year; and the year-end balance sheet showed $420 of prepaid insurance; consequently, the income statement for the year must have shown $______________ of insurance expense.
3. Barnes Company has 20 employees who are each paid $80 per day for a 5-day workweek. The employees are paid each Friday. This year the accounting period ends on Tuesday. Prepare the December 31 year-end adjusting journal entry Barnes Company should make to accrue salaries.
Explanation / Answer
1. Cash Dr. 3,700
Unearned Income Cr. 3,700
2. =650-455+420 = $615 is the insurance expense.
3. Salaries accrued for 2 days (Monday & Tuesday) = $80*20*2 = $3,200
Salaries Expense Dr. 3200
Accrued Salaries Cr. 3200
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