How do I prepare an adjusting entry for the following ?
Wednesday, November 26th, 2008 at 12:27 pm
Looking For Cash Day Advance Loan Reports
A. Casco Co. guarantees the $7,500 debt of a supplier. The supplier will probably not default on the debt.
B. Casco Co. records an adjusting entry for $750,000 of previously unrecorded cash sales (costing $500,000) and it’s sales taxes at a rate of 5%
C. The company earned $75,000 of $100,000 previously received in advance for services.
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November 26th, 2008 at 1:23 pm
A. Casco Co. guarantees the $7,500 debt of a supplier. The supplier will probably not default on the debt.
Since probability of having to pay the $7,500 is remote, no entry is needed, and no disclosure either.
B. Casco Co. records an adjusting entry for $750,000 of previously unrecorded cash sales (costing $500,000) and it’s sales taxes at a rate of 5%
Dr Cash 787,500
Cr Sales $750,000
Cr Sales tax payable $37,500
Dr COGS $500,000
Cr Merchandize inventory $500,000
C. The company earned $75,000 of $100,000 previously received in advance for services.
Dr Unearned revenue $75,000
Cr Services revenues $75,000