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kruti21 · Sep 29, 2010, 09:28 PM

Adjusting Entries
*Its for the year ended December 31, 2013
a. On October 1, 2013, Carberry received $ 25,000 for goods it will produce and de liver to a customer. Carberry will deliver $ 5,000 of the goods each month begin-ning in November 2013. Carberry recorded the transaction by debiting cash and crediting revenue for $ 25,000.

b. On April 1, 2013, Carberry paid $ 25,000 cash for the right to use a vacant lot to store some of its equipment for the next two years. The company debited rent expense and credited cash for $ 25,000.

c. On February 15, 2013, Carberry received its quarterly natural gas bill covering the period November 1, 2012, to January 31, 2013. The accountant debited utilities expense— Natural Gas and credited cash for $ 2,400.

pready · Oct 3, 2010, 11:25 AM

a. You need to transfer 3 months of revenue into unearned revenue because you only earned 2 months of the revenue that was originally recorded. The monthly amount is given to you.

b. You need to transfer all but 9 months of rent expense into Prepaid rent because you paid rent in advance on 1 Apr. You need to keep 9 months in rent expense because you only used the rent for 9 months. Take the rent expense and divide by 24 months to get the monthly rate.

c. You need to transfer 1 month of utilities expense to Prepaid Utilities expense because you did not use one month of utilites. The one month of utilities was used in the next accounting period.