Shown below is the trial balance for Kel-Mar Bakery Co. as at December 31, 2020, the company's year end. The company owner provides you with the following additional information:
a) No interest has been paid yet on the note payable. The note has been outstanding since April 1 and the interest rate is 6%.
b) The equipment originally cost $200,000 and has an estimated residual value of $20,000 and a useful life of 6 years.
c) On June 1 the company renewed its insurance policy and paid a $1,200 premium for the year. It was correctly recorded at that time as prepaid insurance.
d) On October 1 the company sold a 12-month service contract to a client for $18,000 and recorded it as Unearned Revenue because at that point they had not yet provided any service to the client. They have been providing the service since the contract was sold.

Instructions
Prepare any adjusting entries required.

Question

Shown below is the trial balance for Kel-Mar Bakery Co. as at December 31, 2020, the company's year end. The company owner provides you with the following additional information:
a) No interest has been paid yet on the note payable. The note has been outstanding since April 1 and the interest rate is 6%.
b) The equipment originally cost $200,000 and has an estimated residual value of $20,000 and a useful life of 6 years.
c) On June 1 the company renewed its insurance policy and paid a $1,200 premium for the year. It was correctly recorded at that time as prepaid insurance.
d) On October 1 the company sold a 12-month service contract to a client for $18,000 and recorded it as Unearned Revenue because at that point they had not yet provided any service to the client. They have been providing the service since the contract was sold.
  
Instructions
Prepare any adjusting entries required.

Quizplus · Accepted Answer

The Answer of Shown below is the trial balance for Kel-Mar Bakery Co. as at December 31, 2020, the company's year end. The company owner provides you with the following additional information:
a) No interest has been paid yet on the note payable. The note has been outstanding since April 1 and the interest rate is 6%.
b) The equipment originally cost $200,000 and has an estimated residual value of $20,000 and a useful life of 6 years.
c) On June 1 the company renewed its insurance policy and paid a $1,200 premium for the year. It was correctly recorded at that time as prepaid insurance.
d) On October 1 the company sold a 12-month service contract to a client for $18,000 and recorded it as Unearned Revenue because at that point they had not yet provided any service to the client. They have been providing the service since the contract was sold.
  
Instructions
Prepare any adjusting entries required.

Shown Below Is the Trial Balance for Kel-Mar Bakery Co