Prepare Adjusting Entries for the Year Ended December 31, for Each

question 205

Essay

Prepare adjusting entries for the year ended December 31, for each of these separate situations. Assume that prepaid expenses are initially recorded in asset accounts and that fees collected in advance are initially recorded as liabilities.
a. The Prepaid Rent account has a debit balance of $12,000 before adjustment, representing a prepayment for four months rent made on December 1 of the current year.
b. One-third of the work related to $18,000 of cash received in advance was performed during this period.
c. Unpaid accrued salaries at December 31 amounts to $15,000
d. Work was completed for a client on December 31 in the amount of $21,000, but was not previously billed or recorded.
e. Estimated depreciation on office equipment is $27,000.

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Definitions:

Equity Securities

Financial instruments that signify an ownership position in a publicly-traded corporation, such as stocks.

Long-Term Investments

Assets that a company intends to hold for more than one fiscal year, including stocks, bonds, real estate, and other securities.

Preferred Shares

A class of ownership in a corporation that provides a higher claim on assets and earnings than common shares; dividends must be paid on these shares before any can be distributed to common shareholders.