Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

III. P3-5B. Adjusting Entries. The following information relates to the December 31 adjustments for Liquid Barrier, a firm providing waterproofing services for commercial and residential

image text in transcribed
III. P3-5B. Adjusting Entries. The following information relates to the December 31 adjustments for Liquid Barrier, a firm providing waterproofing services for commercial and residential customers. The firm's fiscal year ends December 31; no adjusting entries have been made during the year. During the year: 1. The firm paid a $3,600 premium for a three-year insurance policy, coverage to begin October 1. The premium payment was debited to Prepaid Insurance Expense. 2. Weekly wages for a five-day work week total $5,000, payable on Fridays. December 31 is Thursday 3. Liquid Barrier received $9,000 in November for services to be performed during December through February of the following year. When received, this amount was credited to Unearned Service Fee Revenue. By December 31, one-third of this amount was earned 4. Liquid Barrier receives a 5 percent commission from the manufacturer on sales of a waterproofing agent to Liquid Barrier's customers. By December 31, Liquid Barrier had sales of $100.000 (during November and December) for which no commissions had been received or recorded. 5. During December, fuel oil costs of $800 were incurred to heat the firm's buildings. Because the monthly bill from the oil company has not yet arrived, no entry has been made for this amount (fuel oil costs are charged to Utilities Expense) 6. The Supplies account has a balance of $20,000 on December 31. A count of supplies on December, 31 indicates that $4,000 worth of supplies is still on hand. 7. On December 1, Liquid Barrier borrowed $200.000 from the bank, giving a note payable. Interest is not payable until the note is due near the end of the following January. However, the interest for December is $3,000. 8. Liquid Barrier rents parking spaces in its lots to firms in the office building next door. On December 1, Liquid Barrier received $4.000 as advance payments to cover parking privileges in the lot for December through March of the following year. When received, the $4.000 was credited to Unearned Parking Fee Revenue

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Audit And Assurance Study Text

Authors: KAPLAN

1st Edition

178740398X, 978-1787403987

More Books

Students also viewed these Accounting questions