Question: On March 31 the end of the current fiscal year

On March 31, the end of the current fiscal year, the following information is available to assist Zun Cleaning Company’s accountants in making adjusting entries:
a. Zun’s Supplies account shows a beginning balance of $5,962. Purchases during the year were $10,294. The end-of-year inventory reveals supplies on hand of $3,105.
b. The Prepaid Insurance account shows the following on March 31:
Beginning balance ....... $ 5,990
September 1 ........ 6,480
January 1 .......... 10,080
The beginning balance represents the unexpired portion of a one-year policy purchased in January of the previous year. The September 1 entry represents a new one-year policy, and the January 1 entry represents additional coverage in the form of a three-year policy.
c. The following table contains the cost and annual depreciation for buildings and equipment, all of which Zun purchased before the current year:


d. On December 1, the company completed negotiations with a client and accepted an advance of $32,000 for services to be performed monthly for a year. The $32,000 was credited to Unearned Services Revenue. (Round to the nearest dollar.)
e. The company calculated that, as of March 31, it had earned $9,200 on a $17,000 contract that would be completed and billed in January.
f. Among the liabilities of the company is a note payable in the amount of $600,000. On March 31, the accrued interest on this note amounted to $17,470.
g. On Saturday, April 3, the company, which is on a six-day workweek, will pay its regular employees their weekly wages of $22,000. (Round to the nearest dollar.)
h. On March 31, the company completed negotiations and signed a contract to provide services to a new client at an annual rate of $19,000, beginning April 1.

REQUIRED
1. Prepare adjusting entries for each item listed above.
2. Explain how the conditions for revenue recognition are applied to transactions e andh.


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  • CreatedMarch 26, 2014
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