Bill’s Catering Company is at its accounting year-end, December 31, 2014. The following data that must be considered were developed from the company’s records and related documents:
a. During 2014, office supplies amounting to $1,200 were purchased for cash and debited in full to Supplies. At the beginning of 2014, the count of supplies on hand was $450; at December 31, 2014, the count of supplies on hand was $400.
b. On December 31, 2014, the company catered an evening gala for a local celebrity. The $7,500 bill was due from the customer by the end of January 2015. No cash has been collected, and no journal entry has been made for this transaction.
c. On October 1, 2014, a one-year insurance premium on equipment in the amount of $1,200 was paid and debited in full to Prepaid Insurance on that date. Coverage began on November 1, 2014.
d. On December 31, 2014, repairs on one of the company’s delivery vans were completed at a cost estimate of $600; the amount has not yet been paid or recorded by Bill’s. The repair shop will bill Bill’s Catering at the beginning of January 2015.
e. In November 2014, Bill’s Catering signed a lease for a new retail location, providing a down payment of $2,100 for the first three months’ rent that was debited in full to Prepaid Rent. The lease began on December 1, 2014.
f. On July 1, 2014, the company purchased new refrigerated display counters at a cash cost of $18,000. Depreciation of $2,600 has not been recorded for 2014.
g. On November 1, 2014, the company loaned $4,000 to one of its employees on a one-year, 12 percent note. The principal plus interest is payable by the employee at the end of 12 months.
h. The income before any of the adjustments or income taxes was $22,400. The company’s federal income tax rate is 30 percent.

1. Indicate whether each transaction relates to a deferred revenue, deferred expense, accrued revenue, or accrued expense.
2. Prepare the adjusting entry required for each transaction at December 31, 2014.

  • CreatedJuly 01, 2014
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