Eli Enterprises has just completed its first full year of op

Eli Enterprises has just completed its first full year of operations on December 31, 2018. It provides accounting services to not-for-profit organizations. The unadjusted (normal) trial balance is presented below:

Eli Enterprises

Trail Balance – unadjusted (normal)

As of December 31, 2018

Account Title

Debit

Credit

Cash

$      20,000

$               .              

Accounts Receivable

50,000

Supplies

          5,000

Prepaid Rent

          7,200

Equipment

200,000

Notes Payable

75,000

Accounts Payable

15,000

Unearned Service Revenues

12,000

Common Stock

100,000

Retained Earnings

50,000

Dividends

1,300

Service Revenues

   800,000

Salaries Expenses

700,000

Advertising Expense

        50,000

Utilities Expenses           

        18,500

                     

Total

$ 1,052,000

$ 1,052,000

An analysis of the firm’s records reveals the following:

a.   Equipment purchased January 1, 2018, has an estimated life of ten years.

b.   Utilities expense does not include the expense for December, estimated at $1,650. The bill will not arrive until January, 2019.

c.   The balance in Prepaid Rent represents the amount paid for a three-year insurance beginning on January 1, 2018.  

d.   On July 1, 2018, management borrowed $ 75,000 on a two-year note paying interest of four percent each year.

e.   On September 25, 2018, management received $ 12,000 (unearned service revenues) to perform services from October 1, 2018 through June 30, 2019, nine months.

         Required:         Prepare adjusting entries in journal entry form.         

Eli Enterprises
Trail Balance – unadjusted (normal)
As of December 31, 2018
Account Title			Debit		Credit
Cash			$      20,000		$               .
Accounts Receivable			50,000
Supplies			5,000
Prepaid Rent			7,200
Equipment			200,000
Notes Payable					75,000
Accounts Payable					15,000
Unearned Service Revenues					12,000
Common Stock					100,000
Retained Earnings					50,000
Dividends			1,300
Service Revenues					800,000
Salaries Expenses			700,000
Advertising Expense			50,000
Utilities Expenses			18,500
Total			$ 1,052,000		$ 1,052,000

Solution

Adjusting entries S. No. Account tittle Debit Credit a. Depreciation expense ($200000/10) $20,000.00 Accumulated depreciation equipment $20,000.00 b. Utility expense $1,650.00             Accounts payable $1,650.00 c. Rent Expense ($7200X1/3) $2,400.00 Prepaid Rent $2,400.00 d. Interest expense ($75000*4%*6/12) $1,500.00             Interest payable $1,500.00 e. Cash ($12000*3/9) $4,000.00 Unearned Servcie Revenue $4,000.00