Question
The information necessary for preparing the 2018 year-end adjusting entries for Gamecock Advertising Agency appears below. Gamecocks fiscal year-end is December 31. a. On July
The information necessary for preparing the 2018 year-end adjusting entries for Gamecock Advertising Agency appears below. Gamecock’s fiscal year-end is December 31.
a. On July 1, 2018, Gamecock receives $6,000 from a customer for advertising services to be given evenly over the next 10 months. Gamecock credits Deferred Revenue.b. At the beginning of the year, Gamecock’s depreciable equipment has a cost of $28,000, a four-year life, and no salvage value. The equipment is depreciated evenly (straight-line depreciation method) over the four years.
c. On May 1, 2018, the company pays $4,800 for a two-year fire and liability insurance policy and debits Prepaid Insurance.d. On September 1, 2018, the company borrows $20,000 from a local bank and signs a note. Principal and interest at 12% will be paid on August 31, 2019.
e. At year-end, there is a $2,700 debit balance in the Supplies (asset) account. Only $1,000 of supplies remains on hand.Required:
Record the necessary adjusting entries on December 31, 2018. No prior adjustments have been made during 2018.Step by Step Solution
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Adjusting entry No General journal Debit Credit 1 Deferred revenue 600010...Get Instant Access to Expert-Tailored Solutions
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