eBook Show Me How Calculator Print Item Exercise 3-52 (Algorithmic) Adjusting Entries Allentown Services Inc. is preparing adjusting entries for the year ending December 31, 2019. The following data are available: a. Interest is owed at December 31, 2019, on a 6-month, 8% note. Allentown borrowed $105,600 from NBD on September 1, 2019. b. Allentown provides daily building maintenance services to Mack Trucks for a quarterly fee of $2,400, payable on the fifteenth of the month following the end of each quarter. No entries have been made for the services provided to Mack Trucks during the quarter ended December 31, and the related bill will not be sent until January 15, 2020. c. At the beginning of 2019, the cost of office supplies on hand was $1,820. During 2019, office supplies with a total cost of $6,480 were purchased from Office Depot and debited to office supplies inventory. On December 31, 2019, Allentown determined the cost of office supplies on hand to be $970. d. On September 23, 2019, Allentown received a $8,550 payment from Bethlehem Steel for 9 months of maintenance services beginning on October 1, 2019. The entire amount was credited to unearned service revenue when received. Required: 1. Prepare the appropriate adjusting entries at December 31, 2019. 2,816 Dec. 31 Interest Expense Interest Payable (Record accrued interest) 2,816 Feedback Check My Work 1d. Uneared service revenue is a deferred revenue arising from the receipt of cash for which revenue has not yet been earned. As the revenue ise liability must be adjusted. 2. Conceptual Connection: What would be the effect on the balance sheet and the income statement if the accountant failed to make adjusting entries? a. Net income and stockholders' equity would be understated and liabilities would be understated. X b. Net Income and stockholders' equity would be understated and liabilities would be understated. X c. Net income and stockholders' equity would be understated and liabilities would be understated. X Net Income and stockholders' equity would be understated and liabilities would be understated. X Feedback Feedback Check My Work Partially correct BOOK Show Me How Calculator Print Item Exercise 3-53 (Algorithmic) Adjusting Entries Reynolds Computer Service offers data processing services to retail clothing stores. The following data have been collected to aid in the preparation of adjusting entries for Reynolds Computer Service for 2019: a. Computer equipment was purchased from IBM in 2016 at a cost of $540,000. Annual depreciation is $126,600. b. A fire insurance policy for a 2-year period beginning September 1, 2019, was purchased from Good Hands Insurance Company for $12,360 cash The entire amount of the prepayment was debited to prepaid insurance. (Assume that the beginning balance of prepaid insurance was $0 and that there were no other debits or credits to that account during 2019.) c. Reynolds has a contract to perform the payroll accounting for Dayton's Department Stores. At the end of 2019, $5,680 of services have been performed under this contract but are unbilled. d. Reynolds rents 12 computer terminals for $67 per month per terminal from Extreme Terminals Inc. At December 31, 2019, Reynolds owes Extreme Terminals for half a month's rent on each terminal. The amount owed is unrecorded. e. Perry's Tax Service prepays rent for time on Reynolds' computer. When payments are received from Perry's Tax Service, Reynolds credits unearned rent revenue. At December 31, 2019, Reynolds has earned $1,880 for computer time used by Perry's Tax Service during December 2019. Required: 1. Prepare adjusting entries for each of the transactions. 126,600 Dec. 31 Depreciation Expense Accumulated Depreciation (Record depreciation) Dec. 31 LPCM Rent Payable (Record rent expense for 1/2 month) Dec 31 Unearned Rent Revenue Rent Revenue (Record earned revenue) 2. Conceptual Connection: What would adjusting entries? sheet and the income Statement of the accountant failed to make the above Check My Work 2 more Check My Work uses remaining 2 more Chock My Work uses remaining Previous Next Save and Exit Submit Assignment for G Dec 31 Rent Expense Net Income and stockholders' equity would be overstated and assets would be overstated Net Income and stockholders' equity would be understated and assets would be understated Net Income and stockholders' equity would be overstated and assets would be understated. Net Income and stockholders' equity would be understated and assets would be overstated Net income and stockholders' equity would be overstated and liabilities would be overstated Net income and stockholders' equity would be understated and liabilities would be understated Net income and stockholders' equity would be overstated and liabilities would be understated tement the accountant fo r Net Income and stockholders' equity would be understated and liabilities would be overstated. Exercise 3-60 (Algorithmic) Preparation of Closing Entries James and Susan Morley recently converted a large turn-of-the-century house into a hotel and incorporated the business as Saginaw Enterprises Their accountant is inexperienced and has made the following closing entries at the end of Saginaw's first year of operations Income Summary 208,000 Service Revenue 175,000 33,000 Accumulated Depreciation Depreciation Expense Income Taxes Expense Utilities Expense 33,000 8,200 12,300 66,000 31,000 4,500 Wages Expense Supplies Expense Accounts Payable Income Summary 155,000 Income Summary 53,000 Retained Earnings 53,000 Previous cheduled more. Check M.Workses romaining Income Taxes Expense 8,200 Utilities Expense 12,300 Wages Expense 66,000 31,000 Supplies Expense 4,500 Accounts Payable Income Summary 155,000 Income Summary 53,000 Retained Earnings 53,000 Dividends 3,200 Income Summary 3,200 Required: Prepare the correct closing entries. Assume that all necessary accounts are presented above and that the amounts given are correct. If an an box does not require an entry, leave it blank. Dec 31 Service Revenue 175,000 Income Summary 175,000 (Close revenue account) Previou chada del mare Check M.Work ses remaining PICJU box does not require an entry, leave it blank. SUUVU and that the amounts given are correct. I an am Dec. 31 Service Revenue 175,000 Income Summary 175,000 (Close revenue account) Dec, 31 Income Summary 208,000 Depreciation Expense 33,000 Income Taxes Expense 8,200 Utilities Expense 12.300 Wages Expense 66,000 Supplies Expense (Close expense accounts) Dec. 31 Income Summary Retained Earnings (Close Income Summary) Dec 31 Retained Earnings Dividends (Close Dividends) (Prev ched d more. Check M Worksns remainion