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.

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

  • CreatedMarch 26, 2014
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