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The following selected accounts appear in Shaw Company's unadjusted trial balance at December 31, 2018, the end of its fiscal year (all accounts have normal balances).

 Prepaid advertising $1,200 Performance obligations $5,400 Wages expense 43,800 Service fees revenue 87,000 Prepaid insurance 3,420 Rental income 4,900\begin{array}{lrlr} \text{ Prepaid advertising }& \$ 1,200 &\text{ Performance obligations }& \$ 5,400 \\ \text{ Wages expense }& 43,800 &\text{ Service fees revenue }& 87,000 \\ \text{ Prepaid insurance }& 3,420 &\text{ Rental income }& 4,900 \\ \end{array}

Prepare its adjusting entries at December 3 I. 2018. (1) using the financial statement effects template. and (2) in journal entry form using the following additional information.

  1. Prepaid advertising at December 31 is $800.
  2. Unpaid and unrecorded wages earned by employees in December are$1,300.
  3. Prepaid insurance at December 31 is $2,280.
  4. Perfomance obligations represent service fees collected in advance of when the services are provided to customers. Performance obligations at December 31 are$3,000.
  5. Rent revenue of$ 1,000 owed by a tenant is not recorded at December 31 .

Solution

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Answered 1 year ago
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This exercise will let us prepare the adjusting entries at December 31, 2018, for Shaw Company using:

  1. Financial statement effects template (FSET).
  2. Journal entry form.

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