Question

Question 2
Prepare adjusting journal entries for Blue Gardening in the GENERAL JOURNAL for the year ended 31st December 2018, for each of these situations. Narratives for each entry are required.
a. Blue Gardening received RM6,000 from a client on November 15, 2018, for gardening services to be performed in December 2018, January 2019, and February 2019 The RM6,000 was recorded in Unearned Revenue on November 15. By the end of December, the gardening services for December have been performed.
b. Blue Gardening invested RM100,000 into a 5% government bond some years ago. The 5% interest is due to be paid on 31st December every year. However, Blue Gardening has yet to receive the cheque from the government by 31st December 2018.
c. Blue Gardening pays a total wage of RM5,000 every week to all of its staff working for a five-day workweek. Due to some unforeseen circumstances, the wages for the final week have not been paid.
d. Blue Gardening paid RM24,000 for insurance for 12 months beginning on 1st September 2018. The amount was recorded as Prepaid Insurance on 1st September.
e. Blue Gardening purchased a RM3,500 equipment on 1st January 2018. It has a useful life of three years and it will worth about RM500 at the end of three years. Blue Gardening uses the straight-line depreciation method.
(10 marks)

Answer 1

Adjusting entry

Date	account and explanation	Debit	Credit
Dec 31	Unearned revenue (6000/3)	2000
	Service revenue		2000
Dec 31	Interest receivable (100000*5%)	5000
	Interest revenue		5000
Dec 31	Wages expense	5000
	Wages payable		5000
Dec 31	Insurance expense (24000/12*4)	8000
	prepaid insurance		8000
Dec 31	Depreciation expense (3500-500/3)	1000
	Accumulated depreciation-equipment		1000