Recording Seven Typical Adjusting Entries
Pablo”s Boat Yard, Inc is completing the accounting process for the year just ended, November 30, 2006. The transactions during 2006 has been Journalize and posted. The following data with respect to adjusting entries are available:
- Pablo”s winterized (cleaned and covered) three boats for customers at the end of November, but did not bill the customers $22,760 for the services until December.
- The Gomez family paid Pablo”s $26,000 on November 1, 2006, to store their sailboat for the winter until May 1, 2007. Pablo”s credited the full amount to unearned storage revenue on november1.
- Wage earned by employees during November 2006, unpaid and unrecorded at November 30, 2006, amounted to $31,430. The next payroll date will be December 5, 2006.
- On october1, 2006 Pablo”s paid $4,500 to the local news paper for advertisement to run every Thursday for 12 weeks. All ads have been run expected for three Thursdays in December to complete the 12 weeks contract.
- Pablo”s used boat lifting equipment that cost $2,493,000; $2,493,000 was the estimated depreciation for 2006.
- Boat repair supplies on hand at December 1, 2005, totaled $169,100. Repair supplies purchased and debited to supplies during the year amounted to $514,900. The year end count showed $132,250 of the supplies on hand.
- Pablo”s borrowed $1,626,000 at a 10 percent annual interest rate on April 1, 2006 to expand its boat storage facility. The loan requires Johnson”s to pay the interest quarterly until the note is repaid in three years. Pablo”s paid quarterly interest on July 1 and October 1.
Required:
1. Identify each of these transactions as deferred revenue, deferred expense, accrued revenue or accrued expense.
2. For each situation record the adjusting entry that should be recorded for Johnson”s at November 30, 2006.