Question

Bourne Inc., a calendar-year end company, had the following select account balances from its unadjusted trial balance at 11/30/19: Credit Cash Supplies Deferred Revenue Debit $4,000 700 $0 The following select transactions occurred during the month of December:

Dec. 1 ---- Purchased $2,000 worth of supplies on account. The "Supplies" account was increased at that time.
Dec. 1 ---- Received $6.000 from a customer for services to be performed evenly over the next six months (beginning in December). The "Deferred Revenue account was increased when the cash receipt was recorded.
Dec. 1 ---- Financed the purchase of land by signing a nine-month, 12%, note payable. The amount financed was $40.000.
Dec 15 - Paid for the Dec 1 purchase of supplies in full.
At the end of December, the following information is also available:
• A physical count of supplies reveals supplies costing $800 are still on hand (unused). Required: In the General Journal which starts on the next page:
• Journalize the four December transactions, and
• Journalize any necessary December 31 adjusting journal entries related to the above transactions in order to properly reflect revenues and expenses for the accounting period. Note: If necessary, round adjusting entry calculations to the nearest whole month and to the nearest whole dollar. Note: Journal entries must be in proper form (ex. debits before credits, indent credits) to receive full credit. Explanations should not be included. Skip a line between each journal entry. Date Account Name Debit Credit

Answer 1

Bourne Inc.

Journal entries

Date Account Name Debit Credit

1-Dec Supplies $2,000

Accounts Payable $2,000

1-Dec Cash $6,000

Deferred Revenue $6,000

1-Dec Land $40,000

Notes Payable $40,000

15-Dec Accounts Payable $2,000

Cash $2,000

Adjusting entries

Date Account Name Debit Credit

31-Dec Supplies expense $1,900

($700 + $2,000 - $800)

Supplies $1,900

31-Dec Deferred Revenue $1,000

($6,000/6)

Service Revenue $1,000

31-Dec Interest expense $400

($40,000*12%* 1/12)

Interest Payable $400