Preparing Entries Across Two Periods
The following selected accounts appear in Zimmerman Company'sunadjusted trial balance at December 31, 2015, the end of itsfiscal year (all accounts have normal balances).
Prepaid Maintenance | $2,700 |
Supplies | 8,400 |
Unearned Commission Fees | 8,500 |
Commission Fees Earned | 84,000 |
Rent Expense | 10,800 |
Additional information is as follows.
1. On September 1, 2015, the company entered into a prepaidequipment maintenance contract. Zimmerman Company paid $2,700 tocover maintenance service for 6 months, beginning September 1,2015. The $2,700 payment was debited to Prepaid Maintenance.
2. Supplies available on December 31 are $3,200.
3. Unearned commission fees at December 31 are $4,000.
4. Commission fees earned but not yet billed at December 31 are$2,800. (Hint: Debit Fees Receivable.)
5. Zimmerman Company's lease calls for rent of $900 per monthpayable on the first of each month, plus an annual amount equal to1% of annual commissions earned. This additional rent is payable onJanuary 10 of the following year. (Hint: Use the adjustedamount of commissions earned in computing the additionalrent.)
Required
(a) Prepare Zimmerman Company's adjusting entries at December 31,2015 using the financial statement effects template.
Balance Sheet | Transaction | Cash Asset | + | Noncash Assets | = | Liabilities | + | Contributed Capital | + | Earned Capital | | (1) Recognize maintenance expense. | $Answer
| + | $Answer
| = | $Answer
| + | $Answer
| + | $Answer
| | (2) Recognize supplies expense. | Answer
| + | Answer
| = | Answer
| + | Answer
| + | Answer
| | (3) Accrue earned commissions. | Answer
| + | Answer
| = | Answer
| + | Answer
| + | Answer
| | (4) Earned but unbilled commission fees. | Answer
| + | Answer
| = | Answer
| + | Answer
| + | Answer
| | (5) Rent expense. | Answer
| + | Answer
| = | Answer
| + | Answer
| + | Answer
| |
| Income Statement | |
Revenue
|
-
|
Expenses
|
=
|
Net Income
| | $Answer
| - | $Answer
| = | $Answer
| | Answer
| - | Answer
| = | Answer
| | Answer
| - | Answer
| = | Answer
| | Answer
| - | Answer
| = | Answer
| | Answer
| - | Answer
| = | Answer
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(b) Prepare entries on January 10, 2016, using both thefinancial statement effects template and in journal entry form, torecord (1) the billing of $4,600 in commissions earned (whichincludes the $2,800 of commissions earned but not billed atDecember 31) and (2) the cash payment of the additional rent owedfor 2015. (Hint for part (1): Zimmerman Company has two receivableaccounts-- Fees Receivable is used for amounts earned, but not yetbilled, and Accounts Receivable for amounts that are earned andbilled to the customer.)
For the Noncash Assets answer, enter the net amount for thetransaction.
Balance Sheet | Transaction | Cash Asset | + | Noncash Assets | = | Liabilities | + | Contributed Capital | + | Earned Capital | | (1) | $Answer
| + | $Answer
| = | $Answer
| + | $Answer
| + | $Answer
| | | (2) | Answer
| + | Answer
| = | Answer
| + | Answer
| + | Answer
| |
| Income Statement | |
Revenue
|
-
|
Expenses
|
=
|
Net Income
| | $Answer
| - | $Answer
| = | $Answer
| | | Answer
| - | Answer
| = | Answer
|
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