# On July 1, 2019, Major Co. pays \$15,120 to Mesa Insurance Co. for a 4- year insurance contract. Both companies have fiscal years ending December 31 Journalize and post the entry on July 1 and the adjusting entry on December 31 for Mesa Insurance Co. Mesa uses the accounts Unearned Service Revenue and Service Revenue. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. Round answers to O decimal places,e.g. 5,275.) Date Account Titles and Explanation Debit Credit Unearned Service Revenue Service Revenue

Debit Cash account \$15,120

Credit Unearned Service Revenue \$15,120

Being entries to record cash collected for service to be rendered.

Debit Unearned Service revenue  \$1,890

Credit Service Revenue  \$1,890

Being entries to recognize revenue earned as at 31 December

Explanation:

When an amount is collected in advance for a service yet to be rendered, the company recognizes and asset in form of cash and a liability in form of Unearned Service Revenue.

When the service for which cash was collected is performed, revenue is said to have been earned. Entries required then are debit Unearned Service Revenue Credit Service revenue.

For Mesa, on 1 July , entries required are

Debit Cash account \$15,120

Credit Unearned Service Revenue \$15,120

Being entries to record cash collected for service to be rendered.

As at 31 December, revenue earned

= 1/2 × \$15120/4

= \$1890

Entries required

Debit Unearned Service revenue  \$1,890

Credit Service Revenue  \$1,890

Being entries to recognize revenue earned as at 31 December

The journal entries and adjusting entries should be shown below.

### Journal entries:

Cash account \$15,120

Unearned Service Revenue \$15,120

(Being entries to recordcash collected for service to be rendered)

Unearned Service revenue  \$1,890 ( 1/2 × \$15120/4)

Service Revenue  \$1,890

( to recognizerevenue earned as at 31 December)

These journal entries should be recorded.

## Related Questions

Your uncle will sell you his bicycle shop for \$250,000, with "seller financing," at a 6.0% nominal annual rate. The terms of the loan would require you to make 12 equal end-of-month payments per year for 4 years, and then make an additional final (balloon) payment of \$50,000 at the end of the last month. What would your equal monthly payments be? \$4,029.37

\$4,241.44

\$4,464.67

\$4,699.66

\$4,947.01

\$4,947.01

Explanation:

In this question, we use the present value formula which is shown in the spreadsheet.

The NPER represents the time period.

Given that,

Future value = \$50,000

Present value = \$250,000

Rate of interest = 6% ÷ 12 months = 0.5 months

NPER = 4 years  × 12 months = 48 months

The formula is shown below:

= PMT(Rate,NPER,PV,-FV,type)

The future value comes in negative

So, after solving this, the answer would be \$4,947.01

Assuming you make an additional final (balloon) payment of \$50,000 at the end of the last month, your monthly payments is:\$4,947.01.

### Monthly payment

Based on the given information we would make use of financial calculator to find the PMT by inputting the below data

PMT(Rate,NPER,PV,-FV,type)

Where:

Future value= \$50,000

Present value= \$250,000

Interest rate= 6%/12 = 0.5%

Nper= 4 years  × 12= 48 months

Hence;

PMT=\$4,947.01

Jaxon Furnishings Company is considering logging opportunities in Alaska to obtain wood for their products. The market analysis team is busy comparing the benefits of increased wood production to the costs of deforestation and resulting environmental conditions. The company is using the _____ approach to make this ethical decision.

Jaxon Furnishings Company Vs Logging Opportunities in Alaska

Comparison of the benefits of increased wood production to the costs of deforestation:

The company is using the __environmental sustainability___ approach to make this ethical decision.

Explanation:

According to brittanica.com, environmental "sustainability is understood as a form of intergenerational ethics in which the environmental and economic actions taken by present persons do not diminish the opportunities of future persons to enjoy similar levels of wealth, utility, or welfare."

An approach to an ethical decision is sustainable when it considers the long-term benefits and costs associated with the decision, instead of concentrating on the short-term benefits as some business transactions are done.  Short-termism selfishly considers the immediate gains from a transaction.  It lacks a futuristic appetite for the good of future generations.

1.Calculate the present value (PV ) of a cash inflow of \$500 in one year, and a cash inflow of \$1,000 in 5 years, assuming a discount rate of 15%.

The present value of \$500 in one year is \$434.78 and the present value of \$1,000 in 5 years is \$497.18

Explanation:

Hi, we need to use the following formula

Present Value = Future Value/ (1+Discount Rate)^years

Therefore, in the case of \$500 in one year.

Present Value = \$500/(1+0.15)^1 = \$434.78

And for \$1,000 in 5 years

Present Value = \$1,000/(1+0.15)^5 = \$497.18

Notice that the discount rate (15%) has to be used in its decimal form, that is 0.15 (which you can get by dividing 15/100).

Best of luck.

Best of luck

Barnett Industries, Inc., issued \$600,000 of 8% bonds on January 1, 2019. The bonds pay interest semiannually on July 1 and January 1. The maturity date on these bonds is December 31, 2028. The firm uses the effective interest method of amortizing discounts and premiums. The bonds were sold to yield an effective interest rate of 9%. Barnett incurred legal and investment banking fees of \$22,000 in issuing the bonds and amortizes these costs annually on a straight-line basis.Required:

1. Calculate the selling price of the bonds.
2. Prepare journal entry for the issuance of the bonds and bond issue costs.
3. Assume that Barnett uses IFRS. Prepare the journal entry for the issuance of the bonds.

1. The selling price of the bonds is \$590.976.46

2 .The journal entry for the issuance of the bonds and bond issue costs would be as follows:

Debit                          Credit

Cash                                             \$538,976.26

Discount on bonds payable       \$39,023.74

Unamortized bonds issue costs \$22,000

Bonds Payable                       \$600,000

3. Assuming that Barnett uses IFRS,  the journal entry for the issuance of the bonds would be as follows:

Debit                      Credit

Cash             \$600,000

Bonds Payable             \$600,000

Explanation:

In order to calculate the selling price of the bonds we would have to calculate first the present value of particular and present value of interest, hence:

present value of particular=(\$600,000×0.414643)=\$248,785.80

present value of interest=\$600,000×4%13.007936=\$312,190.46

Therefore, selling price of the bonds=present value of particular+present value of interest

1. Selling price of the bonds=\$248,785.80+\$312,190.46=\$590.976.46

2. The journal entry for the issuance of the bonds and bond issue costs would be as follows:

Debit                          Credit

Cash                                             \$538,976.26

Discount on bonds payable       \$39,023.74

Unamortized bonds issue costs \$22,000

Bonds Payable                       \$600,000

3. Assuming that Barnett uses IFRS,  the journal entry for the issuance of the bonds would be as follows:

Debit                      Credit

Cash             \$600,000

Bonds Payable             \$600,000

A restaurant prepares 200.00 pizza slices and sells them at a rate of \$12.00/slice. Expenses for the restaurant include raw material for pizza at \$5.00 per slice, \$103.00 for monthly rental and monthly insurance of \$30.00. Lost sale are taken as \$6.00 per unhappy customer. Leftover pizza can be sold for \$2.00. The restaurant is open only for 25 days in a month. Today there was a party at nearby office so the demand for pizza went up to 223.00 slices. How much profit could the restaurant earn today?

\$1428

Explanation:

Profit = Total Revenue - total cost

total revenue = price x quantity sold

total cost = variable cost + fixed cost

total revenue = 223 x \$12 = \$2676

Variable cost = \$5 x 223 = \$1115

total fixed cost = \$103.00 + \$30.00 = \$133.00.

Total cost = \$1115 + \$133 = \$1248

profit =  \$2676 - \$1248 = \$1428

Which of these statements regarding project crashing is true? Crashing is not possible unless there are multiple critical paths.
Activities not on the critical path cannot become critical after crashing.
Crashing shortens the project duration by assigning more resources to one or more of the critical tasks.
Crashing a project often reduces the time it takes for lengthy or complex, but noncritical activities.