Question

For each of the following independent situations, prepare journal entries to record the initial transaction on December 31 and the adjustment required on January 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

a. Magnificent Magazines received $12,600 on December 31, 2015, for subscription services related to magazines that will be published and distributed in January through December 2016.

b. Walker Window Washing paid $1,260 cash for supplies on December 31, 2015. As of January 31, 2016, $210 of these supplies had been used up.

c. Indoor Raceway received $3,150 on December 31, 2015, from race participants for providing services for three races. One race is held in January 31, 2016, and the other two will be held in March 2016.

1. Record the receipt of $12,600 on December 31, 2015, for subscription services related to magazines that will be published and distributed from January through December 2016.

2. Record the January 31, 2016 adjusting entry for the December 31, 2015 receipt of $12,600 for magazine subscriptions to be published January through December 2016.

3 .Record the payment of $1,260 cash for supplies by Walker Window Washing on December 31, 2015. As of January 31, 2016, $210 of these supplies had been used up.

4. Record the January 31, 2016 adjusting entry for the December 31, 2015 cash payment of $1,260 for supplies. As of January 31, 2016, $210 of these supplies had been used up.

5 .Record the receipt by Indoor Raceway of $3,150 on December 31, 2015, from race participants for providing services for three races. One race is held on January 31, 2016, and the other two will be held in March 2016.

6. Record the January 31, 2016 adjusting entry for the December 31, 2015 receipt of $3,150 from race participants for providing services for three races. One race is held on January 31, 2016 and the other two will be held in March 2016.

Answer 1

Answer:

a.  Dr Cash    12600

         Cr   Subscription service income  12600

b. 1.  Dr Supplies  1260

                    Cr   Cash          1260

    2.Dr Supplies expense  210

                           Cr  Supplies       210

c. 1. Dr Account receivable  3150

                    Cr Service revenue    3150

   2. Dr Cash      3150

                  Cr Account receivable    3150

1.  Dr Cash           12500

            Cr  Unearned subscription revenue  12500

2. Dr  Unearned subscription revenue   12600

                      Cr  Subscription revenue              12600

3. Dr Supplies    1260

                 Cr Cash           1260

   

4. Dr Supplies expense  210

                      Cr  Supplies          210

5.Dr  Cash   3150

           Cr Advance from customer    3150

6.Dr Advance from customer 3150

       Cr    Service income                 3150

Explanation:

1.As revenue was not earned against service.

2.revenue earned against service rendered.

3.Only supplies were purchased on cash.

4.Only 210 of supplies was used out of 1260 that is why we expense it out

5. Only cash was receive against service which was not rendered yet.

6. Service rendered therefore we debited advance from customer and credited income according to matching principle

Answer 2

"Journal Entries"

Journal entries to record the initial transaction on December 31 and the adjustment required on January 31 is :

Answer 1)

December 31, 2015, Dr. Cash 12600 Cr Subscription service income 12600

Answer 2)

January 31, 2016 Dr Supplies 12600 Cr Cash 12600

Answer 3)

December 31, 2015. Dr Supplies 1260 Cr Cash 1260January 31, 2016 Dr. Supplies expense 210 Cr Supplies 210

Answer 4)

December 31, 2015 Dr Supplies 1260 Cr Cash 1260January 31, 2016 Dr. Supplies expense 210 Cr Supplies 210

Answer5)

December 31, 2015, Dr. Cash 3150 Cr. Advance from customer 3150

Answer 6)

January 31, 2016 Dr. Advance from customer 3150 Cr. Service income 3150

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