Question

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 $8,280 on storage space. At that date, Zimmerman debited Cash and credited Unearned Rent Revenue for $8,280.
B. On October 1 of the current year, the company borrowed $15,600 from a local bank and signed a one-year, 11 percent note for that amount. The principal and interest are payable on the maturity date.
C. Depreciation of $2,300 must be recognized on a service truck purchased in July of the current year at a cost of $24,000.
D. Cash of $3,300 was collected on November of the current year, for services to be rendered evenly over the next year beginning on November 1 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, $10,080, for coverage starting on that date. Cash was credited and Prepaid Insurance was debited for this amount.
F. The company earned service revenue of $4,100 on a special job that was completed December 29 of the current year. Collection will be made during January of the next year. No entry has been recorded.
G. At December 31 of the current year, wages earned by employees totaled $14,100. The employees will be 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 $580 for this year's property taxes on land. The tax will be paid when the bill is received in January of next year. 2. Prepare the adjusting entry required for each transaction at December 31 of the current year.

Answer 1

A. 31/Dec

Dr Unearned Rent Revenue $5,520

Cr Rent Revenue $5,520

B. 31/Dec

Dr Interest expense $429

Cr Interest Payable $429

C. 31/Dec

Dr Depreciation expense $2,300

Cr Accumulated Depreciation-Trucks $2,300

D. 31/Dec

Dr Unearned Service Revenue $ 550

Cr Service Revenue $ 550

E. 31/Dec

Dr Insurance expense $1,680 ($10,080/12*2 months

Cr Prepaid Insurance $1,680

F. 31/Dec

Dr Accounts Receivable $4,100

Cr Service Revenue $4,100

G. 31/Dec

Dr Wages expense $14,100

Cr Wages Payable $14,100

H. 31/Dec

Dr Property tax expense $ 580

Cr Property tax Payable $580

Step-by-step explanation:

Preparation of the adjusting entry required for each transaction at December 31 of the current year.

Zimmerman Company

Journal entries

A. 31/Dec

Dr Unearned Rent Revenue $5,520 ($8,280/6*4 months)

Cr Rent Revenue $5,520

(Sep to Dec is 4 months)

B. 31/Dec

Dr Interest expense $429 ($15,600*11%*3/12)

Cr Interest Payable $429

(Oct to Dec is 3 months)

C. 31/Dec

Dr Depreciation expense $2,300

Cr Accumulated Depreciation-Trucks $2,300

D. 31/Dec

Dr Unearned Service Revenue $ 550 (3,300/12*2 months)

Cr Service Revenue $ 550

(Nov to Dec is 2 months)

E. 31/Dec

Dr Insurance expense $1,680 ($10,080/12*2 months)

Cr Prepaid Insurance $1,680

(Nov to Dec is 2 months)

F. 31/Dec

Dr Accounts Receivable $4,100

Cr Service Revenue $4,100

G. 31/Dec

Dr Wages expense $14,100

Cr Wages Payable $14,100

H. 31/Dec

Dr Property tax expense $ 580

Cr Property tax Payable $580