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Project Instructions

• Please read the following instructions and review the table below carefully. Then, enter answers for journal items [A] to [V] in the next item in this lesson, called Project 1 Part 1 Journal Entries for Accrual Accounting.
• You may keep these instructions open in a separate browser or download the instructions as a PDF, and open it as you work through the exercise.
• Balance Sheet as of 12/31/20X0

Assets

Current Assets:

Cash 1,500,000

Accounts receivable, net 18,000

Inventory 50,000

Total current assets 1,568,000

Equipment 90,000

Goodwill 20,000

Total assets 1,678,000

Liabilities and shareholders' equity

Shareholders' equity:

Common stock, 20,000 shares

outstanding, $1 par ///20,000

Additional paid-in capital 280,000

Retained earnings 1,378,000

Total shareholders' equity 1,678,000

Total liabilities and shareholders' equity 1,678,000

Note that all additional paid-in capital (APIC) sub accounts (e.g., APIC-options and APIC-treasury stock), if any, are tracked in the Additional paid-in capital account on the Balance Sheet.

Project 1.1 Topic: Accrual Accounting

• On 1/1/20X1, Illini prepays 2-year $10,000 insurance premiums for certain assets: $4,000 for 20X1 and $6,000 for 20X2.
• Illini pays $30,000 utility fees and $20,000 rentals each year for 20X1 and 20X2.
• In 20X1, Illini incurs cash-based compensation expense of $100,000, for which $10,000 will be paid in Jan, 20X2 (others are paid in 20X1). In 20X2, Illini incurs cash-based compensation expense of $110,000. The actual total cash compensation payment made in 20X2 is $100,000.
• On 12/31/20X2, Illini receives $50,000 from a customer for a service it will provide in 20X3.

Project 1.1 Balance Sheet

Date	Account Name		Debit	Credit
1/1/20X1	Prepaid insurance		[A]
		Cash		[B]
12/31/20X1	Insurance expense		[C]
		Prepaid insurance		[D]
12/31/20X1	Utility expense		[E]
	Rent expense		[F]
		Cash		[G]
12/31/20X1	Compensation expense		[H]
		Cash		[I]
		Wage payable		[J]
Jan, 20X2	Wage payable		[K]
		Cash		[L]
12/31/20X2	Insurance expense		[M]
		Prepaid insurance		[N]
12/31/20X2	Utility expense		[O]
	Rent expense		[P]
		Cash		[Q]
12/31/20X2	Compensation expense		[R]
		Cash		[S]
		Wage payable		[T]
12/31/20X2	Cash		[U]
		Unearned revenue		[V]

Enter the correct journal entry for part [B] [C].[D]. [E]. [F].[G]. [H].[I].[J].[K].[L].[M].[N]. [O].[P].[Q].[R].[S]. [T].[U].[V].

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