Service Pro Corp (SPC) determined that its unadjusted net income was $10,000 for the year ended September
Question:
Service Pro Corp (SPC) determined that its unadjusted net income was $10,000 for the year ended September 30, 2017. For the following transactions and events, show the adjusting entries that SPC would make on September 30, 2017.
a. At September 30, Prepaid Insurance shows a balance of zero, but Insurance Expense shows a debit balance of $2,340, representing the cost of a three-year fire insurance policy that was purchased on September 1, 2017.
b. On August 31, 2017, Cash was debited and Service Revenue was credited for $1,500. The $1,500 related to fees for a three-month period starting September 1, 2017.
c. The company’s income tax rate is 20 percent. An income tax installment of $2,000 was paid for this year on September 1, at which time it was recorded in Prepaid Expenses.
Step by Step Answer:
Fundamentals of Financial Accounting
ISBN: 978-1259269868
5th Canadian edition
Authors: Fred Phillips, Robert Libby, Patricia Libby, Brandy Mackintosh