How do I record these adjusting journal entries:
How do I record these adjusting journal entries:Adjusting Journal Entries (AJE’s):1.
Wages earned by employees during December (’15) and to be paid in January (’16) are $35,875; associated payroll taxes on these wages are $2,910. (Record in two separate adjusting entries. The payroll taxes are an expense to the company for unemployment benefits and recorded as a payable to the state & federal taxing authority.)
2. The Unearned Consulting Revenue account has a balance of $261,220 as of December 31, 2015. On May 1, 2015 a client paid CMC $153,000 cash in advance for a 12-month consulting services contract. CMC will earn revenue evenly over this 12-month period. This was the only prepayment received from clients during the entire 2015 fiscal year and recorded with a credit to Unearned Revenue. Of the beginning balance in Unearned Revenue (i.e. at Jan 1 2015), 65% of the work has now been completed by year end.
3. You discover that a sale of a product was made on account and recorded in December for $148,500; the product has not yet been shipped (i.e. delivered to the customer). The cost of the product was 55% of its selling price. CMC uses the perpetual inventory method.
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4. Bad debt expense is estimated to be 6% of ending Accounts Receivable. (Round to the nearest whole dollar.)
5. CMC prepays for some insurance and advertising. The Prepaid Expense account has a balance of $26,774 at year end but before adjustment. This balance includes $12,200 for a two-year casualty insurance policy purchased on March 1, 2015. Of the remaining prepaid balance, 60% of the advertising has now been used. (Round to the nearest whole dollar.)
6. Annual depreciation rates are 7% for Buildings & Equipment/Furniture. No salvage. (Round to the nearest whole dollar.)
7. The long-term liabilities were outstanding for all of 2015 and accrue interest at 8% APR. CMCrecords accrued interest quarterly (interest was last updated on Sept. 30.) The company is required to pay the interest annually each January 1st.
8. CMC often allows customers to finance the purchase of their products through long-term lending agreements and therefore reports Long-term Notes Receivable on their Balance Sheet. These notes are interest bearing and earn CMC interest revenue. The beginning balance of Interest Receivable at January 1, 2015 was $3,500. During 2015, cash received from customers for interest on these notes amounted to $17,600. You determine that the income statement for the year-ended December 31, 2015 should show Interest Revenue in the amount of $18,700. The adjusting entry to accrue interest revenue has not yet been recorded.
9. On December 15, CMCdeclareda dividend of $150,000, to be paid on January 20, 2016. It had not yet been recorded.
10. At December 31, the Long-Term Investments (Available-for-sale securities or “AFS”) had a fair value of $165,700. The AFS Investment was originally purchased on May 1, 2015 for $180,186. CMCuses a “Fair Value Adjustment” account (an adjunct/contra account to the Investments) to mark-to-market the investment portfolio at year end. CMC’s tax rate is 35%.
Unadjusted Trial Balance:
| General Ledger Account Name How do I record these adjusting journal entries: Adjusting Journal Entries (AJE’s): 1. Wages earned by employees during December (’15) and to be paid in January (’16) are $35,875; associated payroll taxes on these wages are $2,910. (Record in two separate adjusting entries. The payroll taxes are an expense to the company for unemployment benefits and recorded as a payable to the state & federal taxing authority.) 2. The Unearned Consulting Revenue account has a balance of $261,220 as of December 31, 2015. On May 1, 2015 a client paid CMC $153,000 cash in advance for a 12-month consulting services contract. CMC will earn revenue evenly over this 12-month period. This was the only prepayment received from clients during the entire 2015 fiscal year and recorded with a credit to Unearned Revenue. Of the beginning balance in Unearned Revenue (i.e. at Jan 1 2015), 65% of the work has now been completed by year end. 3. You discover that a sale of a product was made on account and recorded in December for $148,500; the product has not yet been shipped (i.e. delivered to the customer). The cost of the product was 55% of its selling price. CMC uses the perpetual inventory method. 4. Bad debt expense is estimated to be 6% of ending Accounts Receivable. (Round to the nearest whole dollar.) 5. CMC prepays for some insurance and advertising. The Prepaid Expense account has a balance of $26,774 at year end but before adjustment. This balance includes $12,200 for a two-year casualty insurance policy purchased on March 1, 2015. Of the remaining prepaid balance, 60% of the advertising has now been used. (Round to the nearest whole dollar.) 6. Annual depreciation rates are 7% for Buildings & Equipment/Furniture. No salvage. (Round to the nearest whole dollar.) 7. The long-term liabilities were outstanding for all of 2015 and accrue interest at 8% APR. CMCrecords accrued interest quarterly (interest was last updated on Sept. 30.) The company is required to pay the interest annually each January 1st. 8. CMC often allows customers to finance the purchase of their products through long-term lending agreements and therefore reports Long-term Notes Receivable on their Balance Sheet. These notes are interest bearing and earn CMC interest revenue. The beginning balance of Interest Receivable at January 1, 2015 was $3,500. During 2015, cash received from customers for interest on these notes amounted to $17,600. You determine that the income statement for the year-ended December 31, 2015 should show Interest Revenue in the amount of $18,700. The adjusting entry to accrue interest revenue has not yet been recorded. 9. On December 15, CMCdeclareda dividend of $150,000, to be paid on January 20, 2016. It had not yet been recorded. 10. At December 31, the Long-Term Investments (Available-for-sale securities or “AFS”) had a fair value of $165,700. The AFS Investment was originally purchased on May 1, 2015 for $180,186. CMCuses a “Fair Value Adjustment” account (an adjunct/contra account to the Investments) to mark-to-market the investment portfolio at year end. CMC’s tax rate is 35%. Unadjusted Trial Balance: General Ledger Account Name Unadj. Balance 12/31/15 Cash and cash equivalents 72,377 Accounts Receivable 910,680 Allowance for doubtful accounts 29,462 Interest Receivable 0 Inventory 1,270,160 Prepaid expenses 26,774 Other Current Assets 16,063 Investments 180,186 Fair Value Adjustment 0 0 Notes Receivable 220,000 Building 876,418 Equipment and furniture 332,983 Land 348,791 Accum Depr 656,465 Goodwill 493,951 Other intangible assets 213,900 Accounts Payable 1,169,343 Dividends payable Interest payable 41,310 Unearned Consulting Revenue 261,220 Wages payable 81,350 Payroll taxes payable 8,850 Income tax payable Long term liabilities 688,500 Common Stock 920,000 Paid-in capital common stock 105,000 Treasury Stock 400,000 Retained Earnings 539,069 Dividends Accum Other Comprehensive Income 0 0 Sales revenue 9,253,346 Service revenue 1,158,785 Interest Revenue 14,100 Sales returns 162,400 Sales discounts 269,662 Product cost of goods sold 5,384,590 Service cost of goods sold 570,811 Advertising 159,080 Bad debt expense 0 Depreciation and amortization 0 Professional Dues & subscriptions 21,470 Gain/loss on disposal 4,790 Income tax expense 0 Insurance 80,144 Interest expense 41,310 Legal and accounting fees 106,650 Miscellaneous 9,048 Office expense 220,114 Payroll taxes 136,975 Property taxes 104,570 Repair and maintenance 42,028 Research and development 470,680 Telephone 20,085 Travel and entertainment 38,391 Utilities 47,049 Wages 964,670 Salaries – Officers 710,000 Income Summary 0 General Ledger Account Name | Unadj. Balance 12/31/15 | ||
| Cash and cash equivalents | 72,377 | ||
| Accounts Receivable | 910,680 | ||
| Allowance for doubtful accounts | 29,462 | ||
| Interest Receivable | 0 | ||
| Inventory | 1,270,160 | ||
| Prepaid expenses | 26,774 | ||
| Other Current Assets | 16,063 | ||
| Investments | 180,186 | ||
| Fair Value Adjustment | 0 | 0 | |
| Notes Receivable | 220,000 | ||
| Building | 876,418 | ||
| Equipment and furniture | 332,983 | ||
| Land | 348,791 | ||
| Accum Depr | 656,465 | ||
| Goodwill | 493,951 | ||
| Other intangible assets | 213,900 | ||
| Accounts Payable | 1,169,343 | ||
| Dividends payable | |||
| Interest payable | 41,310 | ||
| Unearned Consulting Revenue | 261,220 | ||
| Wages payable | 81,350 | ||
| Payroll taxes payable | 8,850 | ||
| Income tax payable | |||
| Long term liabilities | 688,500 | ||
| Common Stock | 920,000 | ||
| Paid-in capital common stock | 105,000 | ||
| Treasury Stock | 400,000 | ||
| Retained Earnings | 539,069 | ||
| Dividends | |||
| Accum Other Comprehensive Income | 0 | 0 | |
| Sales revenue | 9,253,346 | ||
| Service revenue | 1,158,785 | ||
| Interest Revenue | 14,100 | ||
| Sales returns | 162,400 | ||
| Sales discounts | 269,662 | ||
| Product cost of goods sold | 5,384,590 | ||
| Service cost of goods sold | 570,811 | ||
| Advertising | 159,080 | ||
| Bad debt expense | 0 | ||
| Depreciation and amortization | 0 | ||
| Professional Dues & subscriptions | 21,470 | ||
| Gain/loss on disposal | 4,790 | < /tr> | |
| Income tax expense | 0 | ||
| Insurance | 80,144 | ||
| Interest expense | 41,310 | ||
| Legal and accounting fees | 106,650 | ||
| Miscellaneous | 9,048 | ||
| Office expense | 220,114 | ||
| Payroll taxes | 136,975 | ||
| Property taxes | 104,570 | ||
| Repair and maintenance | 42,028 | ||
| Research and development | 470,680 | ||
| Telephone | 20,085 | ||
| Travel and entertainment | 38,391 | ||
| Utilities | 47,049 | ||
| Wages | 964,670 | ||
| Salaries – Officers | 710,000 | ||
| Income Summary | 0 |
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