Summit Climbing Tours has the following amounts in its records at the end of the fiscal year:
Prepaid insurance ....... $9,000
Unearned revenue ...... 2,500
Wages expense ....... 9,500
Accounts payable ...... 3,575
Interest revenue ........ 2,250
The company also has the following information available at the end of the year:
• Of the prepaid insurance, $2,000 has now expired.
• Of the unearned revenue, $2,200 has been earned.
• The company must accrue an additional $3,275 of wages expense.
• A bill for $500 from the company that provides cleaning services to Summit arrived on the last day of the year. Nothing related to this invoice has been recorded or paid.
• The company has earned an additional $750 of interest revenue, not yet received (or recorded).

1. Use an accounting equation worksheet to show the adjustments at the end of the year.
2. Calculate the balances in each account shown after the adjustments.
3. Indicate whether each adjustment is related to an accrual or a deferral.

  • CreatedSeptember 01, 2014
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