Question

Print B. Henderson Fishing Charters has collected the following data for the December 31 adjusting entries: (Click the icon to view the data.) Read the requirements Requirement 1. Joumalize the adjusting entries needed on December 31 for Henderson Fishing Charters. Assume Henderson records adjusting entries only at the end of the year. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) a. The company received its electric bill on December 20 for $300 but will not pay it until January 5. (Use the Utilities Payable account.) Date Accounts and Explanation Debit Credit (a) Dec. 31 (2) (3) (5) b. Henderson purchased a three-month boat insurance policy on November 1 for $900. Henderson recorded a debit to Prepaid Insurance. Date Accounts and Explanation Debit Credit (b) Dec 31 (6) c. As of December 31, Henderson had earned $2,500 of charter revenue that has not been recorded or received. Date Accounts and Explanation Debit Credit (c) Dec. 31

Answer 1

Requirement 1:

	Date	Accounts	Debit	Credit
a.	Dec, 31	Utilities expense	$          300
		Utilities payable		$          300
		To accrue utilities expense
b.	Dec, 31	Insurance expense	$          600
		Prepaid insurance		$          600
		To record insurance expense accrued
c.	Dec, 31	Accounts receivable	$      2,500
		Service revenue		$      2,500
		To accrue service revenue
d.	Dec, 31	Depreciation Expense - Boat	$      6,500
		Accumulated depreciation - Boat		$      6,500
		To record depreciation expense on boat
e.	Dec, 31	Unearned revenue	$      7,500
		Service revenue		$      7,500
		To record service revenue that was collected in advance

Notes:

• Insurance expense accrued for 2-months = $900 x 2/3 = $600
• Depreciation = ($71,000 - $6,000) / 10 = $6,500

Requirement 2:

Adjusting entry	Specific category of accounts on the Balance sheet	Over / Understated	Specific category of accounts on the Income statement	Over / Understated
a)	Liability	Understated	Expense	Understated
b)	Asset	Overstated	Expense	Understated
c)	Asset	Understated	Revenue	Understated
d)	Liability	Understated	Expense	Understated
e)	Liability	Overstated	Revenue	Understated