Consider the following situations for Shocker:

a) On November 28, 2021, Shocker receives a $4,500 payment from a customer for services to be rendered evenly over the next three months. Deferred Revenue is credited.

b) On December 1, 2021, the company pays a local radio station $2,700 for 30 radio ads that were to be aired, 10 per month, throughout December, January, and February. Prepaid Advertising is debited.

c) Employee salaries for the month of December totaling $8,000 will be paid on January 7, 2022.

d) On August 31, 2021, Shocker borrows $70,000 from a local bank. A note is signed with principal and 9% interest to be paid on August 31, 2022.

Required:

Record the necessary adjusting entries for Shocker at December 31, 2021. No adjusting entries were made during the year. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)

Question

Reynaldo

Business

6 July, 02:00

Consider the following situations for Shocker:

a) On November 28, 2021, Shocker receives a $4,500 payment from a customer for services to be rendered evenly over the next three months. Deferred Revenue is credited.

b) On December 1, 2021, the company pays a local radio station $2,700 for 30 radio ads that were to be aired, 10 per month, throughout December, January, and February. Prepaid Advertising is debited.

c) Employee salaries for the month of December totaling $8,000 will be paid on January 7, 2022.

d) On August 31, 2021, Shocker borrows $70,000 from a local bank. A note is signed with principal and 9% interest to be paid on August 31, 2022.

Required:

Record the necessary adjusting entries for Shocker at December 31, 2021. No adjusting entries were made during the year. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)

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Answers (1)

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Brooklyn Short · Answer 1

a.

Cash $4,500 (debit)

Deferred Revenue $4,500 (credit)

b.

Prepaid Advertising $2,700 (debit)

Cash $2,700 (credit)

c.

Salaries Expense $8,000 (debit)

Salaries Accrued $8,000 (credit)

d.

J1

Cash $70,000 (debit)

Note Payable $70,000 (credit)

J2

Interest Expense $2,100 (debit)

Note Payable $2,100 (credit)

Explanation:

a.

Recognize Cash and Deferred Revenue

b.

Recognize Asset - Prepaid Advertising and De-recognize Cash

c.

Recognize Salaries Expense and Recognize Salaries Accrued Liability

d.

J1

Recognize Cash Asset and Recognize Liability - Note Payable

J2

Recognize Interest income accrued on the Note Payable during September to December.