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. Gamecocks fiscal year-end is December 31.
a. On July 1, 2018, Gamecock receives $5,500 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, Gamecocks depreciable equipment has a cost of $39,000, a six-year life, and no salvage value. The equipment is depreciated evenly (straight-line depreciation method) over the six years.
c. On May 1, 2018, the company pays $4,200 for a two-year fire and liability insurance policy and debits Prepaid Insurance.
d. On September 1, 2018, the company borrows $15,000 from a local bank and signs a note. Principal and interest at 9% will be paid on August 31, 2019.
e. At year-end there is a $2,450 debit balance in the Supplies (asset) account. Only $950 of supplies remains on hand.
Required:
Record the necessary adjusting entries on December 31, 2018. No prior adjustments have been made during 2018. (If no entry is required for a particular transaction/event, select "No journal entry required" in the first account field.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started