[mjacobson86]

I need help with this adjusting entry. The adjustment is:

Record the income earned from the Jim Bob Grocery account.

The only info I have for the Jim Bob Grocery account is : Jim Bob Grocery Store paid Eric $1,800 in advance for six months of cleaning services to be performed monthly, at the end of every month. The monthly charge to Jim Bob Grocery is $300.

So what would the adjusting entry be for the income earned?

[codyman144]

Please don't post the same question several times.

[mjacobson86]

This is for an adjustment entry, I didn't post that more than once.

[codyman144]

Ok, Well what do you think the entry would be?

[mjacobson86]

I really don't know, the way it is worded is throwing me off. I haven't done an adjustment where it is calling for income earned to be adjusted. Could you give me what the accounts would be and then I'll take a guess?

[codyman144]

When you booked the payment you did this:

Debt Cash 1800
Credit unearned revenue 1800

Now you earned $300 of that revenue, so what do you need to do? Hint: you must reduce the balance in unearned revenue.

[mjacobson86]

Oh okay so:

Debt unearned revenue 300
Credit revenue 300 ?

[codyman144]

Good job...

You do understand why now correct? That is the important part...

[mjacobson86]

Yeah I do thanks very much.

Also, are these entries correct?

Paid $2,400 on a one-year insurance policy, effective August 1.

dr. prepaid insurance 2400
Cr. Cash 2400

Purchased 50 cans of cleaning product, XB4, for resale purposes only. Each can cost $8.00, total cost is $400, on account. The shipping costs were $15.00, also included in the amount owed

dr. merchandise inventory 415
Cr. Accounts payable 415

[codyman144]

yeah i do thanks very much.

Also, are these entries correct?

Paid $2,400 on a one-year insurance policy, effective August 1.

dr. prepaid insurance 2400
cr. cash 2400

Purchased 50 cans of cleaning product, XB4, for resale purposes only. Each can cost $8.00, total cost is $400, on account. The shipping costs were $15.00, also included in the amount owed

dr. merchandise inventory 415
cr. accounts payable 415

First one if you are making the entry before August yes. It all hinges on when this was paid.

Second one looks okay as long as it is company policy to include the cost of shipping in inventory. Many companies do but not all.

[mjacobson86]

The first one is made August 5th but is effective August 1st...

[mjacobson86]

The first one is made August 5th but is effective August 1st...

[codyman144]

the first one is made august 5th but is effective august 1st...

Yeah you are fine...