M3 Flashcards
The company purchase a $300, 3-year insurance policy on 1/1/Year 2 and expensed it all on the payment date. Record year 2’s adjusting entry
Dr prepaid insurance 200
CR Insurance expense 200
$2,000 of credit sales made during year 2 were not recorded in the ledger because they had not been collected in cash
DR A/R 2K
CR Sales Revenue 2K
Cash totaling 3K that was received in advance from customers was recorded to service revenue. Only 30% of the services had been performed by year-end (900)
DR Sales revenue $2100
CR Unearned revenue $2100
a $450 utility bill covering the month of December had not been entered into the system
DR Utility Expense 450
CR A/P 450
$4K rent was prepaid year 1 for 4 years rent. No entry was made in year 2
DR Rent expense 1K
CR Prepaid rent 1K
The direct write off method was used to write off $650 bad debt in year 2, although the company uses the allowance approach to estimate bad debts
Dr allowance for doubtful accounts
CR Bad debt expense
Company purchased available-for-sale securities during year 2 for 1500 the FV at year end totaled 2K but no adjustment to FV was recorded
DR Valuation acct 500
CR Unrealized gain 500
purchased 1300 raw materials FOB goods were not included in inventory
DR Inventory 1300
CR A/P 1300
