Journal Page Question--Accounting
HERE IS THE QUESTION:
Sweeney & Associates, a large marketing firm, adjusts its accounts at the end of each month. The following information is available for the year ending December 31, 2009: 1. A bank loan had been obtained on December
1. Accrued interest on the loan at December 31 amounts to $ 1,200. No interest expense has yet been recorded.
2. Depreciation of the firm’s office building is based on an estimated life of 25 years. The build-ing was purchased in 2005 for $ 330,000.
3. Accrued, but unbilled, revenue during December amounts to $ 64,000.
4. On March 1, the firm paid $ 1,800 to renew a 12- month insurance policy. The entire amount was recorded as Prepaid Insurance.
5. The firm received $ 14,000 from King Biscuit Company in advance of developing a six- month marketing campaign. The entire amount was initially recorded as Unearned Revenue. At December 31, $ 3,500 had actually been earned by the firm.
6. The company’s policy is to pay its employees every Friday. Since December 31 fell on a Wednesday, there was an accrued liability for salaries amounting to $ 2,400. a. Record the necessary adjusting journal entries on December 31, 2009. b. By how much did Sweeney & Associates’s net income increase or decrease as a result of the adjusting entries performed in part a? ( Ignore income taxes.)
HERE IS WHAT I DID:
1) Interest Expense (Debit) 1,200
Interest Payable (Credit) 1,200
2) Depreciation Expense (Debit) 1,100
Accumulated Depreciation (credit) 1,100
3) Accounts Receivable (Debit) 64,000
Accumulated Revenue (credit)64,000
4) Insurance Expense (Debit) 150
Unexpected Insurance (Credit) 150
5)
6) Wages Expense ((debit) 2400
Wages payable (credit) 2400
I would like someone to tell me if this looks correct. I was also a little stumped on number 5? Thanks to anyone who can help!
