FINANCIAL ACCOUNTING ADJUSTING ENTRIES HOMEWORK

ON 12/31 (EFY) YOU HAVE BEEN ASKED TO MAKE THE REQUIRED ADJUSTING ENTRIES FROM THE FOLLOWING INFORMATION:

A. ON 10/1 THE COMPANY ENTERED INTO A ONE YEAR DEVELOPMENT CONTRACT. THE TOTAL AMOUNT OF THE CONTRACT WAS $1,500,000. ON 10/1 THE COMPANY RECEIVED $200,000 AS A PREPAYMENT ON THE CONTRACT. THE BOOKKEEPER DEBITED CASH AND CREDITED CONTRACT REV. TO RECORD THE PREPAYMENT. ON 12/31 20% OF THE CONTRACT WAS COMPLETED.

B. THE COMPANY PURCHASED LIABILITY INSURANCE ON 3/1 FOR ONE YEAR AND PAID $36,000 FOR THE POLICY. THE BOOKKEEPER DEBITED INSURANCE EXPENSE AND CREDITED CASH TO RECORD THE TRANSACTION.

C. ON 12/15 THE COMPANY SUBLEASED OFFICE SPACE TO A TENANT FOR $20,000 PER MONTH. THE COMPANY RECEIVED THE FIRST MONTHS RENT ON 12/15 AND THE BOOKKEEPER RECORDED THE TRANSACTION BY DEBITING CASH AND CREDITING RENT REVENUE.

D. ON 10/15 THE COMPANY ENTERED IN TO ANOTHER CONTRACT FOR ONE YEAR IN THE AMOUNT OF $1,000,000. ON THAT DATE THE COMPANY RECEIVED $150,000 AS A PREPAYMENT ON THE CONTRACT. THE BOOKKEEPER DEBITED CASH AND CREDITED UN-EARNED REV. FOR THE AMOUNT. ON 12/31/01 10% OF THE CONTRACT HAD BEEN COMPLETED.

E. ON 6/1 THE COMPANY PURCHASE A FIRE INSURANCE FOR ONE YEAR FOR $12,000. THE COMPANY PAID CASH ON THAT DATE. THE BOOKKEEPER DEBITED PRE-PAID INSURANCE EXPENSE AND CREDIT CASH TO RECOR THE TRANSACTION.

F, ON 12/31 THE COMPANY OWED $100,000 IN WAGES TO ITS EMPLOYEES.THE WAGES WILL BE PAID ON 1/3 OF THE NEXT YEAR. NO ENTRY HAD BEEN MADE TO RECORD THIS FACT.

G. ON 12/31 $4,800 IN INTEREST WAS OWED ON A LOAN FROM THE BANK. THE PRINCIPLE AND INTEREST WILL BE PAID ON 2/28 OF THE NEXT YEAR.

H. DEPRECIATION FOR THE YEAR WAS CALCULATED TO BE $187,000.

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