Comments on: How do I prepare an adjusting entry for the following ? http://www.cashdayadvance.org/cash-advance/cash-advance-guaranteed/how-do-i-prepare-an-adjusting-entry-for-the-following/ Cash Day Advance Online Resources And Information Mon, 21 May 2012 02:50:22 +0000 http://wordpress.org/?v=abc By: Sandy http://www.cashdayadvance.org/cash-advance/cash-advance-guaranteed/how-do-i-prepare-an-adjusting-entry-for-the-following/#comment-2240 Sandy Wed, 26 Nov 2008 17:23:42 +0000 http://www.cashdayadvance.org/how-do-i-prepare-an-adjusting-entry-for-the-following/#comment-2240 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 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

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