Question

Kuepper’s Day Care is a large daycare center in South Orange, New Jersey. The daycare center serves several nearby businesses, as well as a number of individual families. The businesses pay $6,180 per child per year for daycare services for their employees’ children. The businesses pay in advance on a quarterly basis. For individual families, daycare services are provided monthly and billed at the beginning of the next month. The following transactions describe Kuepper’s activities during December 2011:
a. On December 1, Kuepper borrowed $60,000 by issuing a five-year, $60,000, 9 percent note payable.
b. Daycare service in the amount of $12,450 was provided to individual families during December. These families will not be billed until January 2012.
c. At December 1, the balance in unearned service revenue was $43,775. At December 31, Kuepper determined that $3,090 of this revenue was still unearned.
d. On December 31, the daycare center collected $131,325 from businesses for services to be provided in 2012.
e. On December 31, the center recorded depreciation of $2,675 on a bus that it uses for fieldtrips.
f. The daycare center had prepaid insurance at December 1 of $4,200. An examination of the insurance policies indicates that prepaid insurance at December 31 is $2,200.
g. Interest on the $60,000 note payable (see item a) is unpaid and unrecorded at December 31.
h. Salaries of $25,320 are owed but unpaid on December 31.
i. Supplies of disposable diapers on December 1 are $4,400. At December 31, the cost of diapers in supplies is $890.
Required:
1. Identify whether each entry is an adjusting entry or a regular journal entry. If the entry is an adjusting entry, identify it as an accrued revenue, accrued expense, deferred revenue, or deferred expense.
2. Prepare the entries necessary to record the transactions above and on the previous page.


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  • CreatedSeptember 22, 2015
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