Tutorial Two Q1) Ben Cartwright Pest Control has the following balances in selected accounts on December 31, 2010. Accounts Receivable $0 Equipment 24,000 Spraying Equipment 6,650 Notes Payable 9,500 Prepaid Insurance 1,980 Supplies 2,940 Unearned Spraying Revenues 36,000 All of the accounts have normal balances. The information below has been gathered at December 31, 2010. 1. Ben Cartwright Pest Control paid $1,980 for 12 months of insurance coverage on October 1, 2010. 2. Ben Cartwright Pest Control pays its employees total salaries of $10,000 not paid or recorded. 3. Ben Cartwright Pest Control performed services for a client in December 2010. The client will be billed $3,000. 4. On December 1, 2010, Ben Cartwright Pest Control collected $36,000 for processes to be performed from December 1, 2010, through May 31, 2011. 5. A count of supplies on December 31, 2010, indicates that supplies of $750 are on hand. Instructions Prepare in journal form with explanations, the adjusting entries for the seven items listed for Ben Cartwright Pest Control given that Ben Cartwright Pest Control prepares its financial statement annually. Solution Date (1) (10min.) Accounts title and Explanation Dr Insurance Expense .............................................................. Prepaid Insurance ............................................................. (To recognize period insurance expense) [($1,980 / 12) * 3 = $495)] 495 salaies Expense ..................................................................... salaies Payable .................................................................. (To record wages for the week) 10,000 Accounts Receivable .............................................................. Spraying Revenues ........................................................... (To record revenue earned but not yet received) 3,000 (4) Unearned Spraying Revenues ................................................ Spraying Revenues ............................................................ (To record revenue earned with prior payment) 6,000 (5) Supplies Expense .................................................................... Supplies ............................................................................. (To record supplies expense) 2,190 (2) (3) [$2,940 - 750 = $2,190] Cr 495 10,000 3,000 6,000 2,190 Q2) MCQs: 1. O.K.C. Company collected $8,400 in May of 2010 for 4 months of service which would take place from October of 2010 through January of 2011. The revenue reported from this transaction during 2010 would be a. 0. b. $6,300. c. $8,400. d. $2,010. 2. Cindi’s Candies paid employee wages on and through Friday, January 26, and the next payroll will be paid in February. There are three more working days in January (29–31). Employees work 5 days a week and the company pays $900 a day in wages. What will be the adjusting entry to accrue wages expense at the end of January? a. Wages Expense 900 Wages Payable 900 b. Wages Expense 4,500 Wages Payable 4,500 c. Wages Expense 2,700 Wages Payable 2,700 d. No adjusting entry is required. Q3). Journalize the proper adjusting entry. a. on June the company recorded unearned Revenues of 60,000.at the end of the year, 17,000 $ of the unearned Revenues has been earned. b. Unbilled services provided to customer 15,000. Date A Accounts title and Explanation Unearned Revenues Services Revenues Dr 17,000 Cr 17,000 (unearned Revenues has been earned) B Accrued Revenues Services Revenues (Unbilled services provided) 15,000 15,000