a) What if, for P3-4B, event 2, the $429,000 balance was in Rental Revenue instead of Unearned Revenue?  In other words, Khan Co. credits Rental Revenue when they receive a payment from a lessee.  Under this scenario, prepare the required adjusting journal entries on December 31, 2017.

b) What if, for P3-4B, instead of an annual accounting period, Khan Company had monthly accounting periods?  Prepare the adjusting entries for events 2, 3, and 4 for the month ending December 31, 2017.  Ignore a) above.

Transcribed Image Text:

P3-4B A review of the ledger of Khan Company at December 31, 2017, produces the fol- lowing data pertaining to the preparation of annual adjusting entries. 1. Prepaid Insurance €9,300. The company has separate insurance policies on its build- ings and its motor vehicles. Policy B4564 on the building was purchased on April 1, 2016, for €6,000. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2017, for €4,800. This policy has a term of 2 years. 2. Unearned Rent Revenue €429,000. The company began subleasing office space in its new building on November 1. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease. Term Number of Date (in months) Monthly Rent Leases Nov. 1 Dec. 1 €5,000 8,500 6 4 3. Notes Payable €120,000. This balance consists of a note for 9 months at an annual interest rate of 9%, dated November 1. 4. Salaries and Wages Payable €0. There are eight salaried employees. Salaries are paid every Friday for the current week. Five employees receive a salary of €640 each per week, and three employees earn €500 each per week. Assume December 31 is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December. P3-4B A review of the ledger of Khan Company at December 31, 2017, produces the fol- lowing data pertaining to the preparation of annual adjusting entries. 1. Prepaid Insurance €9,300. The company has separate insurance policies on its build- ings and its motor vehicles. Policy B4564 on the building was purchased on April 1, 2016, for €6,000. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2017, for €4,800. This policy has a term of 2 years. 2. Unearned Rent Revenue €429,000. The company began subleasing office space in its new building on November 1. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease. Term Number of Date (in months) Monthly Rent Leases Nov. 1 Dec. 1 €5,000 8,500 6 4 3. Notes Payable €120,000. This balance consists of a note for 9 months at an annual interest rate of 9%, dated November 1. 4. Salaries and Wages Payable €0. There are eight salaried employees. Salaries are paid every Friday for the current week. Five employees receive a salary of €640 each per week, and three employees earn €500 each per week. Assume December 31 is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December.