A Review of the Ledger of Weakly Service Co

question 142

Essay

A review of the ledger of Weakly Service Co. at December 31, 2014, produces the following data pertaining to the preparation of annual adjusting entries:
(a) Notes Payable $80,000: This is a 9-month note, dated September 1, 2014, with a 9% interest rate.
(b) Prepaid Rent $648,000. The company rents offices throughout the Midwest. During 2014 it signed 10 leases as shown below: (c) Unearned Service Revenue $171,000. During 2014 the company entered into 13 monthly service contracts with clients. The clients prepaid for the services to be provided over the contract period in an even manner. Instructions:
Prepare the adjusting entries at December 31, 2014. Show all computations.

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Definitions:

Short-Run Supply Curve

A graphical representation showing the relationship between the market price of a good and the quantity supplied by producers in the short term.

Optimal Output

The level of production that maximizes a company's profits or minimizes its costs, taking into account demand and production capacity.

Market Price

The present cost at which a product or service may be purchased or sold, dictated by market demand and supply.

Optimal Short-Run Output

The level of production that maximizes a firm's short-term profits, given its existing constraints.