Answer to Question #41635 in Finance for yohes

Question

Prepare adjusting journal entries for Wan Catering in the GENERAL JOURNAL for the year ended 31st December 2012, for each of these situations. Narratives for each entry are required.
i. Wan Catering received RM5, 000 from a customer on November 15, 2012, for catering service to be performed in December 2013. The RM5, 000 was recorded in Unearned Revenue in November 2012. By the end of December, the service has been performed.
ii. Wan Catering invested RM50, 000 into a 5% government bond some years ago. The 5% interest was due to be paid on 31st December every year. However, Wan Catering had yet to receive the payment from the government by 31st December 2012.
iii. Wan Catering paid a total salary of RM28, 000 every month to all of its staffs. Due to some unforeseen circumstances, the salaries for the final week amounting to RM7, 000 have not been paid.
iv. Wan Catering paid RM12, 000 for insurance for 12 months beginning on 1st September 2012. The amount was recorded as Prepaid Insurance on 1st September.

Answer 1

Account Debit Credit
i. Accounts receivable RM5,000
Unearned Revenue RM5,000
ii. Investment in bonds RM50,000
Interest receivable RM5,000
Cash RM55,000
iii. Payroll expenses RM28,000
Salary received RM21,000
Accrued Payroll Expenses RM7,000
iv. Insurance expences RM12, 000
Prepaid Insurance RM12, 000