Hart Corporation encounters the following situations:
Identify what type of adjusting entry (prepaid expense, unearnedrevenue, accrued expense, or accrued revenue) is needed in eachsituation at December 31, 2015.
-A.B.C.D. Hart collects $1,300 from a customer in 2015 for services to beperformed in 2016.
-A.B.C.D. Hart incurs utility expense which is not yet paid in cash orrecorded.
-A.B.C.D. Hart's employees worked 3 days in 2015 but will not be paiduntil 2016.
-A.B.C.D. Hart performs services for customers but has not yet receivedcash or recorded the transaction.
-A.B.C.D. Hart paid $2,400 rent on December 1 for the 4 months startingDecember 1.
-A.B.C.D. Hart received cash for future services and recorded a liabilityuntil the service was performed.
-A.B.C.D. Hart performed consulting services for a client in December2015. On December 31, it had not billed the client for servicesperformed of $1,200.
-A.B.C.D. Hart paid cash for an expense and recorded an asset until theitem was used up.
-A.B.C.D. Hart purchased $900 of supplies in 2015; at year-end, $400 ofsupplies remain unused.
-A.B.C.D. Hart purchased equipment on January 1, 2015; the equipment willbe used for 5 years.
-A.B.C.D. Hart borrowed $10,000 on October 1, 2015, signing an 8% one-yearnote payable.
A. Unearned Revenue
B. Accrued Expense
C. Accrued Revenue
D. Prepaid Expenses
Hart Corporation encounters the following situations:
Identify what type of adjusting entry (prepaid expense, unearnedrevenue, accrued expense, or accrued revenue) is needed in eachsituation at December 31, 2015.
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Related questions
Terrific Temps fills temporary employment positions for localbusinesses. Some businesses pay in
advance for services; others are billed after services have beenperformed. Advanced payments are
credited to an account entitled Unearned Fees. Adjusting entriesare performed on a monthly basis.
An unadjusted trial balance dated December 31, 2015, follows. (Bearin mind that adjusting entries
have already been made for the first 11 months of 2015, but not forDecember.)
| TERRIFIC TEMPS UNADJUSTED TRIAL BALANCE DECEMBER 31, 2015 | |||||
| Cash | $ | 27,020 | |||
| Accounts receivable | 59,200 | ||||
| Unexpired insurance | 900 | ||||
| Prepaid rent | 3,000 | ||||
| Office supplies | 600 | ||||
| Equipment | 60,000 | ||||
| Accumulated depreciation: equipment | $ | 29,500 | |||
| Accounts payable | 4,180 | ||||
| Notes payable | 12,000 | ||||
| Interest payable | 320 | ||||
| Unearned fees | 6,000 | ||||
| Income taxes payable | 4,000 | ||||
| Unearned revenue | 20,000 | ||||
| Retained earnings | 49,000 | ||||
| Capital stock | 25,000 | ||||
| Dividends | 3,000 | ||||
| Feesearned | 75,000 | ||||
| Travel expense | 5,000 | ||||
| Insurance expense | 2,980 | ||||
| Rentexpense | 9,900 | ||||
| Office supplies expense | 780 | ||||
| Utilities expense | 4,800 | ||||
| Depreciation expense: equipment | 5,500 | ||||
| Salaries expense | 30,000 | ||||
| Interest expense | 320 | ||||
| Income taxes expense | 12,000 | ||||
| $ | 225,000 | $ | 225,000 | ||
| Other Data | |
| 1. | Accrued butunrecorded fees earned as of December 31, 2015, amount to$1,500. |
| 2. | Records showthat $2,500 of cash receipts originally recorded as unearned feeshad been earned as of December 31. |
| 3. | The companypurchased a six-month insurance policy on September 1, 2015, for$1,800. |
| 4. | On December 1,2015, the company paid its rent through February 28, 2016. |
| 5. | Office supplieson hand at December 31 amount to $400. |
| 6. | All equipment was purchased when the business first formed. Theestimated life of the equipment at that time was 10 years (or 120months). |
| 7. | On August 1, 2015, the company borrowed $12,000 by signing asix-month, 8 percent note payable. The entire note, plus sixmonths' accrued interest, is due on February 1, 2016. |
| 8. | Accrued butunrecorded salaries at December 31 amount to $2,700. |
| 9. | Estimated incometaxes expense for the entire year totals $15,000. Taxesare due in the first quarter of 2016. |
| Instructions |
| a. | For each of thenumbered paragraphs, prepare the necessary adjusting entry.(If no entry is required for a transaction/event, select"No journal entry required" in the first accountfield.) |
Journal Entry Worksheet
Record the accrued but uncollected fees earned.
Record fees earned as of December 31st.
Record the December insurance expense.
Record the December rent expense.
Record the offices supplies used in December.
Record the December depreciation expense.
Record the interest accrued in December.
Record the salaries accrued in December.
Record the income taxes accrued in December.
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*Enter debits before credits
| 1. | Fees earned | |
| 2. | Travel expense | |
| 3. | Insurance expense | |
| 4. | Rent expense | |
| 5. | Office supplies expense | |
| 6. | Utilities expense | |
| 7. | Depreciation expense: equipment | |
| 8. | Interest expense | |
| 9. | Salaries expense | |
| 10. | Income taxes expense |
| . | The unadjusted trial balance reportsdividends of $3,000. As of December 31, 2015, have these dividendsbeen paid? | ||||
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