On September 1 of the current year, Zimmerman collected six months' rent of $8,760 on storage space. At that date, Zimmerman debited Cash and credited Unearned Rent Revenue for $8,760. On October 1 of the current year, the company borrowed $19,200 from a local bank and signed a one-year, 11 percent note for that amount. The principal and interest are payable on the maturity date. Depreciation of $2,000 must be recognized on a service truck purchased in July of the current year at a cost of $20,000. Cash of $3,600 was collected on November of the current year, for services to be rendered evenly over the next year beginning on November 1 of the current year. Unearned Service Revenue was credited when the cash was received. On November 1 of the current year, Zimmerman paid a one-year premium for property insurance, $9,600, for coverage starting on that date. Cash was credited and Prepaid Insurance was debited for this amount. The company earned service revenue of $3,000 on a special job that was completed December 29 of the current year. Collection will be made during January of the next year. No entry has been recorded. At December 31 of the current year, wages earned by employees totaled $14,300. The employees will be paid on the next payroll date in January of the next year. On December 31 of the current year, the company estimated it owed $590 for this year's property taxes on land. The tax will be paid when the bill is received in January of next year.

Incomplete Question but now completed below:

Required:

1. Indicate whether each transaction relates to a deferred revenue, deferred expense, accrued revenue or accrued expense.

2. Give the adjusting entry for each transaction as at 31st December.

Explanation:

1. On September 1 of the current year, Zimmerman collected six months' rent of $8,760 on storage space. At that date, Zimmerman debited Cash and credited Unearned Rent Revenue for $8,760. It is a deferred revenue

2.  On October 1 of the current year, the company borrowed $19,200 from a local bank and signed a one-year, 11 percent note for that amount. It is an accrued expense.

3. Depreciation of $2,000 must be recognized on a service truck purchased in July of the current year at a cost of $20,000. Deferred Expense

4. Cash of $3,600 was collected on November of the current year, for services to be rendered evenly over the next year beginning on November 1 of the current year . Deferred Income.

5. On November 1 of the current year, Zimmerman paid a one-year premium for property insurance, $9,600, for coverage starting on that date. Deferred Expense.

6. The company earned service revenue of $3,000 on a special job that was completed December 29 of the current year. Accrued Income/revenue.

7. At December 31 of the current year, wages earned by employees totaled $14,300. The employees will be paid on the next payroll date in January of the next year. Accrued salaries & wages

8. On December 31 of the current year, the company estimated it owed $590 for this year's property taxes on land. The tax will be paid when the bill is received in January of next year. Accrued Expenses(Tax)

2. Journal Entries

1. On September 1 of the current year, Zimmerman collected six months' rent of $8,760 on storage space. At that date, Zimmerman debited Cash and credited Unearned Rent Revenue for $8,760.

Cr: Unearned rent revenue    $5,840      

Dr: Rent Revenue                    $5,840 (8760/6*4(sep-dec))

2.  On October 1 of the current year, the company borrowed $19,200 from a local bank and signed a one-year, 11 percent note for that amount.  The principal and interest are payable on the maturity date.

Dr: Bank          $19,200

Cr: Loan a/c          $19,200

3. Depreciation of $2,000 must be recognized on a service truck purchased in July of the current year at a cost of $20,000. Deferred Expense

Cr: Depreciation expense $2,000

Dr: Accumulated Depreciation $2000

4. Cash of $3,600 was collected on November of the current year, for services to be rendered evenly over the next year beginning on November 1 of the current year. Unearned Service Revenue was credited when the cash was received.

Dr: Unearned Service Revenue  $600

Cr: Service revenue             $600 (3600/12*2)

5. On November 1 of the current year, Zimmerman paid a one-year premium for property insurance, $9,600, for coverage starting on that date. Cash was credited and Prepaid Insurance was debited for this amount

Cr: Prepaid Insurance $1,600

Dr: Insurance expenses $1,600 (9600/12*2)

6. The company earned service revenue of $3,000 on a special job that was completed December 29 of the current year. Collection will be made during January of the next year.

Dr: Service Income          $3,000

Cr: Accrued Income          $3,000

7. At December 31 of the current year, wages earned by employees totaled $14,300. The employees will be paid on the next payroll date in January of the next year.

Dr: Accrued Salaries and wages     $14,300

Cr: Salaries & wages expenses       $14,300

8. On December 31 of the current year, the company estimated it owed $590 for this year's property taxes on land. The tax will be paid when the bill is received in January of next year.

Dr: Accrued Property Tax            $590

Cr: Property tax Expenses         $590

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