Problem (30 points) Chipotle Mexican Grill, Inc in its first footnote describes itself as restaurants which feature a relevant menu of burritos, burrito bowls (a burrito without the tortilla), tacos, and salads We strive to cultivate a better world by serving responsibly sourced, classically cooked, real food with wholesome ingredients and without artificial colors, flavors or preservatives We are passionate about providing a great guest experience and making our food more accessible to everyone while continuing to be a brand with a demonstrated purpose Steve Ells, founder and former executive chairman, first opened Chipotle with a single restaurant in Denver, Colorado in 1993 Over 25 years later, our devotion to seeking out the very best ingredients, raised with respect for animals, farmers, and the environment, remains at the core of our commitment to Food With Integrity As of December 31, 2020, we owned and operated 2,724 Chipotle restaurants throughout the United States, 40 international Chipotle restaurants, and four non Chipotle restaurants We manage our operations based on eight regions and have aggregated our operations to one reportable segment Our revenue is derived from sales by company owned restaurants Use the following information to provide the adjusting journal entry that Chipotle should have made on December 31, 2020which was the end of the fiscal year 2020 Assume that Chipotle makes adjusting entries once a year at fiscal year end At the end of fiscal year 2020, Chipotle owed employees $203 million related to work completed (but not yet paid) during fiscal year 2020 What adjusting journal entry should Chipotle make on December 31, 2020 related to these wages owed to employees Account Title Debit Credit Salary Expense 203 Salary Payable 203 At the end of fiscal year 2020, Chipotle calculates that it has $105 million in sales on account that have not yet been received or recorded What adjusting journal entry should Chipotle make on December 31, 2020 related to the sales on account Account Title Debit Credit Accounts Receivable 105 Sales Revenue 105 Chipotle receives a utility bill every four weeks for the previous four weeks On February 15, 2021, Chipotle receives a bill of $18 million covering the last three weeks of fiscal year 2020 and the first week of fiscal year 2021 Assuming that utilities are used evenly over the period, what adjusting journal entry should Chipotle make on December 31, 2020 related to this future utility bill Account Title Debit Credit Utilities Expense 13 5 Utilities Payable 13 5 Chipotles property and equipment depreciates $239 million during fiscal year 2020 Account Title Debit Credit On April 1, 2020 , Chipotle paid $220 million for future adverting of its products The ads will run over the subsequent 12 month period (i e , April 1, 2020 to March 31, 2021) On April 1, Chipotle made the following journal entry Dr Prepaid Advertising 220 million Cr Cash 220 million Chipotle did not make any journal entries related to the prepaid advertising after the initial journal entry shown above What adjusting journal entry should Chipotle make on December 31, 2020 related to the prepaid advertising Account Title Debit Credit On January 1, 2020, Chipotle had $16 million in Supplies, and they purchased $35 million more in Supplies during fiscal year 2020 A year end physical count of Chipotles supplies indicates that they have $23 million worth of Supplies remaining as of December 31, 2020 If Chipotle did not make journal entries when they used supplies during fiscal year 2020, what adjusting journal entry should Chipotle make related to its Supplies on December 31, 2020 Account Title Debit Credit On October 1, 2020 , Chipotle sold $168 million of gift cards to a corporate client Chipotle assumes that these gift cards will be redeemed evenly each month over the next 24 months On October 1, 2020, Chipotle made the following journal entry Dr Cash 168 million Cr Unearned Revenue 168 million Gift cards were redeemed during October, November, and December, but Chipotle did not make any journal entries related to the unearned revenue after the initial journal entry shown above What adjusting journal entry should Chipotle make on December 31, 2020 related to the unearned revenue Account Title Debit Credit

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Problem (30 points) Chipotle Mexican Grill, Inc in its first footnote describes itself as: restaurants which feature a relevant menu of burritos, burrito bowls (a

Problem (30 points)

Chipotle Mexican Grill, Inc in its first footnote describes itself as: restaurants which feature a relevant menu of burritos, burrito bowls (a burrito without the tortilla), tacos, and salads. We strive to cultivate a better world by serving responsibly sourced, classically cooked, real food with wholesome ingredients and without artificial colors, flavors or preservatives. We are passionate about providing a great guest experience and making our food more accessible to everyone while continuing to be a brand with a demonstrated purpose. Steve Ells, founder and former executive chairman, first opened Chipotle with a single restaurant in Denver, Colorado in 1993. Over 25 years later, our devotion to seeking out the very best ingredients, raised with respect for animals, farmers, and the environment, remains at the core of our commitment to Food With Integrity. As of December 31, 2020, we owned and operated 2,724 Chipotle restaurants throughout the United States, 40 international Chipotle restaurants, and four non-Chipotle restaurants. We manage our operations based on eight regions and have aggregated our operations to one reportable segment. Our revenue is derived from sales by company-owned restaurants.

Use the following information to provide the adjusting journal entry that Chipotle should have made on December 31, 2020which was the end of the fiscal year 2020. Assume that Chipotle makes adjusting entries once a year at fiscal year end.

At the end of fiscal year 2020, Chipotle owed employees $203 million related to work completed (but not yet paid) during fiscal year 2020. What adjusting journal entry should Chipotle make on December 31, 2020 related to these wages owed to employees?

Account Title	Debit	Credit
Salary Expense	203
Salary Payable		203

At the end of fiscal year 2020, Chipotle calculates that it has $105 million in sales on account that have not yet been received or recorded. What adjusting journal entry should Chipotle make on December 31, 2020 related to the sales on account?

Account Title	Debit	Credit
Accounts Receivable	105
Sales Revenue		105

Chipotle receives a utility bill every four weeks for the previous four weeks. On February 15, 2021, Chipotle receives a bill of $18 million covering the last three weeks of fiscal year 2020 and the first week of fiscal year 2021. Assuming that utilities are used evenly over the period, what adjusting journal entry should Chipotle make on December 31, 2020 related to this future utility bill?

Account Title	Debit	Credit
Utilities Expense	13.5
Utilities Payable		13.5

Chipotles property and equipment depreciates $239 million during fiscal year 2020.

Account Title	Debit	Credit

On April 1, 2020, Chipotle paid $220 million for future adverting of its products. The ads will run over the subsequent 12-month period (i.e., April 1, 2020 to March 31, 2021). On April 1, Chipotle made the following journal entry:

Dr. Prepaid Advertising		220 million
	Cr. Cash		220 million

Chipotle did not make any journal entries related to the prepaid advertising after the initial journal entry shown above. What adjusting journal entry should Chipotle make on December 31, 2020 related to the prepaid advertising?

Account Title	Debit	Credit

On January 1, 2020, Chipotle had $16 million in Supplies, and they purchased $35 million more in Supplies during fiscal year 2020. A year-end physical count of Chipotles supplies indicates that they have $23 million worth of Supplies remaining as of December 31, 2020. If Chipotle did not make journal entries when they used supplies during fiscal year 2020, what adjusting journal entry should Chipotle make related to its Supplies on December 31, 2020?

Account Title	Debit	Credit

On October 1, 2020, Chipotle sold $168 million of gift cards to a corporate client. Chipotle assumes that these gift cards will be redeemed evenly each month over the next 24 months. On October 1, 2020, Chipotle made the following journal entry:

Dr. Cash		168 million
	Cr. Unearned Revenue		168 million

Gift cards were redeemed during October, November, and December, but Chipotle did not make any journal entries related to the unearned revenue after the initial journal entry shown above. What adjusting journal entry should Chipotle make on December 31, 2020 related to the unearned revenue?