The following selected accounts appear in Zimmerman Company's unadjusted trial balance at December 31, 2018, the end of its fiscal year (all accounts have normal balances).

Additional information is as follows.

1. On September 1, 2018, the company entered into a prepaid equipment maintenance contract. Zimmerman Company paid $2,700 to cover maintenance service for 6 months, beginning September 1, 2018. The $2,700 payment was debited to Prepaid Maintenance.

2. Supplies available on December 31 are $3,200.

3. Performance obligations at December 31 are $4,000.

4. Commission revenue earned but not yet billed at December 31 are $2,800.

5. Zimmerman Company's lease calls for rent of $900 per month payable on the first of each month, plus an annual amount equal to 1 % of annual commission revenue. This additional rent is payable on January 10 of the following year. (Hint: Use the adjusted amount of commission revenue in computing the additional rent.)

REQUIRED:

a. Prepare Zimmerman Company's adjusting entries at December 31, 20 18, using the financial statement effects template.

b. Prepare entries on January 10, 2019, using the financial statement effects template to record (I) the billing of $4,600 in commissions earned (which includes the $2,800 of commissions earned but not billed at December 31) and (2) the cash payment of the additional rent owed for 2018.

c. Prepare the adjusting entries from part a and the transactions in part b in journal entry form.

Transcribed Image Text:

Prepaid maintenance Supplies. Performance obligations... Commission revenue. Rent expense. $2,700 $84,000 ...... .3B .... 8,400 10,800 ..... 8,500