Stay N Shape was started by Jennifer Long several years ago
Stay’N Shape was started by Jennifer Long several years ago to provide physical fitness services to its customers. The following balances were extracted from the company’s general ledger as at the following dates:
Additional information about several transactions that occurred in May is provided below:
a. Some customers pay for services in advance. The remaining customers are sent invoices for services used and are allowed one month to pay their invoices. During May, the company received from customers a total of $ 62,000 in cash, including an amount of $ 7,000 that was paid by customers in advance.
b. At the end of April, the company paid rent for the next five months and recorded the amount as prepaid rent.
c. The balance of prepaid insurance at April 30 represents the cost of insuring the company’s premises and equipment for one month. In May, the company received an invoice from the insurance company for a renewal of the company’s insurance policy for one year. The insurance premium was increased by 10 percent over the amount of the premium of the previous year because the company filed a few insurance claims. The company paid the one- year insurance premium.
d. The note payable carries annual interest of 6 percent and is due on June 30, 2014, along with accrued interest. The company recognizes interest expense on a monthly basis.
e. An invoice for $ 780 pertaining to advertising work done during May was received on May 2.
f. Supplies amounting to $ 17,200 were purchased on account during May and debited to the supplies expense account. A physical count of supplies on hand on May 31 valued the inventory at $ 11,500.
Prepare journal entries to record the following transactions and events:
1. The receipt of cash from customers and the recognition of all revenues earned in May.
2. Rent expense for May.
3. Payment of the premium for the new insurance policy.
4. Interest expense that accrued in May.
5. The invoice for advertising work, received on May 2.
6. The adjustment to the supplies inventory account.
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