Refer to CP4-2.

Required:

Indicate the effects (account, amount, and direction) of each adjusting journal entry. Use + for increase, − for decrease, and NE for no effect. Provide an appropriate account name for any revenue and expense effects.

Data from CP4-2:

Jordan Company’s annual accounting year ends on December 31. It is now December 31, 2018, and all of the 2018 entries have been made except for the following:

a. The company owes interest of $700 on a bank loan. The interest will be paid when the loan is repaid on September 30, 2019. No interest has been recorded.

b. On September 1, 2018, Jordan collected six months’ rent of $4,800 on storage space. At that date, Jordan debited Cash and credited Deferred Revenue for $4,800.

c. The company earned service revenue of $3,300 on a special job that was completed December 29, 2018. Collection will be made during January 2019. No entry has been recorded.

d. On November 1, 2018, Jordan paid a one-year premium for property insurance of $4,200, for coverage starting on that date. Cash was credited and Prepaid Insurance was debited for this amount.

e. At December 31, 2018, wages earned by employees but not yet paid totaled $1,100. The employees will be paid on the next payroll date, January 15, 2019.

f. Depreciation of $1,000 must be recognized on a service truck purchased this year. 

g. The income after all adjustments other than income taxes was $30,000. The company’s income tax rate is 30%. Compute and record income tax expense.

Transcribed Image Text:

Transaction Assets Stockholders' Equity Interest Expense (+E) -700 Liabilities Interest Payable +700 NE etc.