P4-2 LO4-1 Recording Adjusting Entries (AP4-2) All of the current year's entries for Zimmerman Company have been made, except the following adjusting entries. The company's annual accounting year ends on December 31. a. On September 1 of the current year, Zimmerman collected six months' rent of $9,600 on storage space. Al that date, Zimmerman debited Cash and credited Unearned Rent Revenue for $9,600. b. On October 1 of the current year, the company borrowed $18,000 from a local bank and signed a one year, 12 percent note for that amount. The principal and interest are payable on the maturity date. c. Depreciation of $3,500 must be recognized on a service truck purchased in July of the current year at a cost of $22.000. d. Cash of $3,000 was collected on November of the current year for services to be rendered evenly over the next year beginning on November of the current year. Unearned Service Revenue was credited when the cash was received. e On November 1 of the current year, Zimmerman paid a one-year premium for property insurance, $8,400, for coverage starting on that date. Cash was credited and Prepaid Insurance was debited for this amount. The company earned service revenue of $4,000 on a special job that was completed December 29 the current year. Collection will be made during January of the next year. No entry has been recordcu At December 31 of the current year, wages earned by employees totaled $14,000. The employees WII U paid on the next payroll date in January of the next year. h On December 31 of the current year, the company estimated it owed $500 for this year's property on land. The tax will be paid when the bill is received in January of next year. Required Indicate whether each transaction relates to a deferred revenue, deferred expense, accrued revenue, or accrued expense. 2. Give the adjusting entry required for each transaction at December 31 of the current year. P4-6 1,4-3, 4-4 Inferring Year-End Adjustments, Computing Earnings per Share and for Turnover, and Recording Closing Entries (AP4-6) Ramirez Company is completing the information processing cycle at its fiscal year-end on December 31 Following are the correct balances at December 31 for the accounts both before and after the adjusting entries. Items 720 TRIAL BALANCE, DECEMBER 31 OF THE CURRENT YEAR After Before Adjusting Entries Adjustments Adjusting Entries Debit Credit Debit Credit Debit a. Cash 13,500 13,500 b. Accounts receivable 1.820 c. Prepaid insurance 850 d. Equipment 168,280 168,280 e Accumulated depreciation, equipment 42,100 48,100 f. Income taxes payable 1,155 g. Common stock and additional paid-in capital 112,000 112,000 h. Retained earnings, January 1 19,600 19,600 1. Service revenue 64,400 1. Salary expense expense 55,470 55,470 k. Depreciation expense 6,000 1. Insurance expense m. Income tax expense 130 1,155 238,100 238,100 247,075 247,075 66.220 Required: olumns before and after the adjusting entries to reconstruct the ing entries made in the current year. Provide an explanation of each. 2. Compute the amount of net income assuming that it is based on the amounts (a) before adjusting! entries and (b) after adjusting entries. Which net income amount is correct? Explain why. 3. Compute earnings per share (rounded to two decimal places), assuming that 3,000 shares of stock are outstanding all year. 4. Compute the total asset turnover ratio (rounded to two decimal places), assuming total assets at the beginning of the year were $110,000. If the industry average is 0.49, what does this suggest to you about Ramirez Company? 5. Record the closing entry at December 31 of the current year