At 11:00 PM New Year's Eve, Judy Asiago, the owner of Cheese Pouf Catering, Inc. (CPC),...

 

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At 11:00 PM New Year's Eve, Judy Asiago, the owner of Cheese Pouf Catering, Inc. (CPC), was just packing up the company's equipment after a very successful and lucrative pre-teen New Year's Eve party. CPC was just an hour away from ending its first year in business. As Judy was stacking plates and packing up supplies, she thought about her financial accounting class at YSU and began to think about the accounting issues that she would have to face to wind up the year and create the company's financial statements. She remembered that she would have to make adjusting journal entries to record expenses and revenues that should be recognized in 2017, even though there were no concrete transactions to mark those entries. The following facts floated up in her awareness as situations requiring adjusting journal entries (AJES): 1. CPC had borrowed $20,000 from FNB Bank on May 1, 2017, promising to pay the principal and interest at 8% 9 months later on February 1, 2018. 2. Tonight's event (representing revenue of $32,500) and several other events CPC catered during the holiday season (representing $184,200 in revenue) would not be billed until January 5, 2018, even though they were all completed and billable in 2017. Judy vaguely remembers something called the revenue recognition principle and thinks an AJE is called for here. 3. CPC purchased a Pouffer 3000, a specialized piece of cooking equipment, for $8,000 on August 1, 2017. Judy estimates that CPC should be able to use the Pouffer 3000 for 5 years and that it would be worth $400 as scrap. CPC takes depreciation to the nearest month, but only records depreciation at the end of each year. 4. Judy's staff of cooks and servers will receive their next paychecks on Friday, January 5 The 31- represents the 7th day of a 12 day pay period. She estimates that the payroll will total $15,600 by the end of the pay period and that salaries and wages are earned evenly over the period. 5. On November 1, 2017, Cleveland Clinic paid CPC a retainer of $240,000 to provide pop-up catered lunches to Clinic staff at various locations over three months, starting November 1". The work load required is equally spread over those three months. 6. CPC debits all supply purchases to the Catering Supplies Expense account. At midnight, the account shows a balance of $34,600. A count of the catering supplies made right after the pre-teen New Year's event showed that CPC has $1,900 of catering supplies on hand. INSTRUCTIONS: 1. Create the adjusting journal entries for CPC. Please round to the nearest dollar and show calculations directly underneath each AJE. 2. Indicate what type of AJE each entry is, also directly underneath each AJE. 3. If Cheese Pouf Catering had net income of $435,800 prior to the posting of the AJES, what is it afterwards? Please show your calculations in a schedule. 4. Create all cash entries in the subsequent year implied the accrued expense and accrued revenue AJES. your At 11:00 PM New Year's Eve, Judy Asiago, the owner of Cheese Pouf Catering, Inc. (CPC), was just packing up the company's equipment after a very successful and lucrative pre-teen New Year's Eve party. CPC was just an hour away from ending its first year in business. As Judy was stacking plates and packing up supplies, she thought about her financial accounting class at YSU and began to think about the accounting issues that she would have to face to wind up the year and create the company's financial statements. She remembered that she would have to make adjusting journal entries to record expenses and revenues that should be recognized in 2017, even though there were no concrete transactions to mark those entries. The following facts floated up in her awareness as situations requiring adjusting journal entries (AJES): 1. CPC had borrowed $20,000 from FNB Bank on May 1, 2017, promising to pay the principal and interest at 8% 9 months later on February 1, 2018. 2. Tonight's event (representing revenue of $32,500) and several other events CPC catered during the holiday season (representing $184,200 in revenue) would not be billed until January 5, 2018, even though they were all completed and billable in 2017. Judy vaguely remembers something called the revenue recognition principle and thinks an AJE is called for here. 3. CPC purchased a Pouffer 3000, a specialized piece of cooking equipment, for $8,000 on August 1, 2017. Judy estimates that CPC should be able to use the Pouffer 3000 for 5 years and that it would be worth $400 as scrap. CPC takes depreciation to the nearest month, but only records depreciation at the end of each year. 4. Judy's staff of cooks and servers will receive their next paychecks on Friday, January 5 The 31- represents the 7th day of a 12 day pay period. She estimates that the payroll will total $15,600 by the end of the pay period and that salaries and wages are earned evenly over the period. 5. On November 1, 2017, Cleveland Clinic paid CPC a retainer of $240,000 to provide pop-up catered lunches to Clinic staff at various locations over three months, starting November 1". The work load required is equally spread over those three months. 6. CPC debits all supply purchases to the Catering Supplies Expense account. At midnight, the account shows a balance of $34,600. A count of the catering supplies made right after the pre-teen New Year's event showed that CPC has $1,900 of catering supplies on hand. INSTRUCTIONS: 1. Create the adjusting journal entries for CPC. Please round to the nearest dollar and show calculations directly underneath each AJE. 2. Indicate what type of AJE each entry is, also directly underneath each AJE. 3. If Cheese Pouf Catering had net income of $435,800 prior to the posting of the AJES, what is it afterwards? Please show your calculations in a schedule. 4. Create all cash entries in the subsequent year implied the accrued expense and accrued revenue AJES. your

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1 Journal entry Dr Cr 1May Cash 20000 Bank Loan 20000 entry recorded on May1 Principal 20000 Rate 8 Interest for 9 months 200008912 1200 May1 2017 Dec... View the full answer