Prepare the necessary year-end adjusting journal entries

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Question - Prepare the necessary year-end (as at December 31) adjusting journal entries independent for each of the following situations:

a) On September 30 a company borrowed $20,000 for one year at 10% interest. Principal and interest are due September 30 of next year.

b) On September 1, a company received $12,000 from a customer for work to be performed equally over the next 12 months. The entire amount was credited to "Revenue earned".

c) Sales for the entire year total $2,000,000, are subject to an estimated warranty cost of 2.8 percent of sales. No entries have been recorded in the year.

d) Per the sales and warranty details noted in part c. above, assume in the following year the company has actual claims totaling 1.9 percent of their sales, and they replace defective units from their existing product inventory. Record the entry in this subsequent year.

Reference no: EM132984844

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