E account and 1 balance sheet account, but never changes the fixed asset account. statement 3....

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E account and 1 balance sheet account, but never changes the fixed asset account. statement 3. The Ledger of the Day Company includes the following accounts. Briefly explain why each account may require an adjustment (Adjusting Entry AJE) a) Prepaid Insurance- b) Salary Expense - c) Interest Payable - d) Service Fees Earned - e) Unearned Revenue - f) Depreciation Expense - 4. Emery Corporation encounters the following situations. Identify what type of adjusting entry (deferred expense, deferred revenue, accrued revenue, or accrued expense) is needed on December 31, 20X1 in each situation and why it qualifies as that type. Also, please show the initial journal entry if there was one, NOT THE ADJUSTING ENTRY. So, only the Deferrals will have journal entries shown here. a) Emery received $2,000 cash for future services to be preformed and recorded a liability at the time the cash was received. As of Dec. 31, 20X1, half of this has been earned. Type-Ruenne Why-cash received without corresponding delivery liability not Account Name recorded entry involves 1 Ime income Date 12/31 cash 1213 un earned revenue $2000 b) Emery's employees worked 3 days in 20X1 earning $1,500. The company will pay them in early 20X2. Why Not paid yet Type - Expense Why - Not Date Account Name 2011 2021 (c) Emery paid and December 1 Type - Date Date 11 H Expense why- fent is Account Name PR Debit $ 2000 Cash uneurned Salaries expense -1500 Salarles payable properly recorded $4,000 of rent on December 1, 20X1 for the next 4 months starting $ 1500 revenue Debit earlier is paid ewler and later on used PR Debit Credit 4000 $ Credit Mol cash 12/0 unearned revenue $ 4000 (d) Emery collected $2,500 cash from a customer in November 20X1 for services to be performed in 20X2. Credit Type - revenue why- Cash is received and services and revenue is recognized_ Account Name PR Debit Credit 2500 $ $2500 Type Date MA MA (e) Emery borrowed $10,000 on October 1, 20X1 by signing an 12% one-year note payable. Interest = $300 [$10,000* 12% *(3/12) (P*R*T)] Type - expense Date (0/0 10/01 $300 (f) Emery paid $1,200 cash on July 1, 20X1 for 12 months of insurance expense and recorded it as an asset. Type - Expense Why - Pre-payment of insurance 12 months but 6 months expired Date Account Name PR Credit 07/01 insurance expense 07/0 Prepald $1200 g) Emery performed services worth $2,000 on December 28, 20X1 and billed the customer on January 3, 20X2. Payment Date 12/28 12/28 Type-revenue Why- Why-interest is incurred for 3 months → payable Account Name PR Debit Credit 11 300 interest expense interest payable 12 12 Type - expense Date Account Name Accounts receivable Service 01/9 ob Date NIA MA revenue Type - expense Why - Expense incurred Date Account Name PR of h) Emery received a utility billing of $800 in January 20X2 for the utilities used in December 20X1. but pund later utilities expense utilities payable why - Early Account Name Supplies PR is made Debit i) Emery purchased $900 of supplies on account in December 20X1 of which, at year end, $200 of the supplies remains unused. expense Supplies Debit $1200 $2000 Deprication expense Accumulated deprication Accounts rece/vable Service revenue Debit $ 800 Early payment of supplies and expense PR Debit Credit $700 PR Credit $2000 j) Emery purchased machinery for $10,000 on January 1, 20X1 by signing a Note Payable; the company thinks the equipment will be used for the next 5 years helping the company earn revenue. Why - Deprention is incurred Type - expense Date Account Name Debit $12000 Credit $ 800 $2500 $700 $2000 is earned but not paid. (k) Emery earned $2,500 of revenues but has not yet recorded the transaction or received the cash. Type-revenue Why- Revenues Account Name PR Debit Credit Credit $2500 5. The situations in Exercise #4 that will be requiring an adjusting entry at the 20X1 year end are: a,b,c,e,f,g,h,i,j,&k. The remaining situation was properly handled when it was journalized and does not require an entry at the end of the year to adjust. (1) Prepare the adjusting entry in the following journal. Posting References are not needed because you will not post these. Omit explanations and skip lines between entries. (2) After making the adjusting entries required, how much will the Net Income change (Increase? Decrease?) Date (a) b] (c) e] f) [g) (h) 0 m (k) GENERAL JOURNAL Account Name PR Debit Page 6 Credit E account and 1 balance sheet account, but never changes the fixed asset account. statement 3. The Ledger of the Day Company includes the following accounts. Briefly explain why each account may require an adjustment (Adjusting Entry AJE) a) Prepaid Insurance- b) Salary Expense - c) Interest Payable - d) Service Fees Earned - e) Unearned Revenue - f) Depreciation Expense - 4. Emery Corporation encounters the following situations. Identify what type of adjusting entry (deferred expense, deferred revenue, accrued revenue, or accrued expense) is needed on December 31, 20X1 in each situation and why it qualifies as that type. Also, please show the initial journal entry if there was one, NOT THE ADJUSTING ENTRY. So, only the Deferrals will have journal entries shown here. a) Emery received $2,000 cash for future services to be preformed and recorded a liability at the time the cash was received. As of Dec. 31, 20X1, half of this has been earned. Type-Ruenne Why-cash received without corresponding delivery liability not Account Name recorded entry involves 1 Ime income Date 12/31 cash 1213 un earned revenue $2000 b) Emery's employees worked 3 days in 20X1 earning $1,500. The company will pay them in early 20X2. Why Not paid yet Type - Expense Why - Not Date Account Name 2011 2021 (c) Emery paid and December 1 Type - Date Date 11 H Expense why- fent is Account Name PR Debit $ 2000 Cash uneurned Salaries expense -1500 Salarles payable properly recorded $4,000 of rent on December 1, 20X1 for the next 4 months starting $ 1500 revenue Debit earlier is paid ewler and later on used PR Debit Credit 4000 $ Credit Mol cash 12/0 unearned revenue $ 4000 (d) Emery collected $2,500 cash from a customer in November 20X1 for services to be performed in 20X2. Credit Type - revenue why- Cash is received and services and revenue is recognized_ Account Name PR Debit Credit 2500 $ $2500 Type Date MA MA (e) Emery borrowed $10,000 on October 1, 20X1 by signing an 12% one-year note payable. Interest = $300 [$10,000* 12% *(3/12) (P*R*T)] Type - expense Date (0/0 10/01 $300 (f) Emery paid $1,200 cash on July 1, 20X1 for 12 months of insurance expense and recorded it as an asset. Type - Expense Why - Pre-payment of insurance 12 months but 6 months expired Date Account Name PR Credit 07/01 insurance expense 07/0 Prepald $1200 g) Emery performed services worth $2,000 on December 28, 20X1 and billed the customer on January 3, 20X2. Payment Date 12/28 12/28 Type-revenue Why- Why-interest is incurred for 3 months → payable Account Name PR Debit Credit 11 300 interest expense interest payable 12 12 Type - expense Date Account Name Accounts receivable Service 01/9 ob Date NIA MA revenue Type - expense Why - Expense incurred Date Account Name PR of h) Emery received a utility billing of $800 in January 20X2 for the utilities used in December 20X1. but pund later utilities expense utilities payable why - Early Account Name Supplies PR is made Debit i) Emery purchased $900 of supplies on account in December 20X1 of which, at year end, $200 of the supplies remains unused. expense Supplies Debit $1200 $2000 Deprication expense Accumulated deprication Accounts rece/vable Service revenue Debit $ 800 Early payment of supplies and expense PR Debit Credit $700 PR Credit $2000 j) Emery purchased machinery for $10,000 on January 1, 20X1 by signing a Note Payable; the company thinks the equipment will be used for the next 5 years helping the company earn revenue. Why - Deprention is incurred Type - expense Date Account Name Debit $12000 Credit $ 800 $2500 $700 $2000 is earned but not paid. (k) Emery earned $2,500 of revenues but has not yet recorded the transaction or received the cash. Type-revenue Why- Revenues Account Name PR Debit Credit Credit $2500 5. The situations in Exercise #4 that will be requiring an adjusting entry at the 20X1 year end are: a,b,c,e,f,g,h,i,j,&k. The remaining situation was properly handled when it was journalized and does not require an entry at the end of the year to adjust. (1) Prepare the adjusting entry in the following journal. Posting References are not needed because you will not post these. Omit explanations and skip lines between entries. (2) After making the adjusting entries required, how much will the Net Income change (Increase? Decrease?) Date (a) b] (c) e] f) [g) (h) 0 m (k) GENERAL JOURNAL Account Name PR Debit Page 6 Credit

Answer rating: 100% (QA)

a Prepaid Insurance Explanation Prepaid insurance represents the amount paid in advance for insurance coverage Over time as the coverage is consumed the prepaid amount should be recognized as an expen... View the full answer