Ocean Breeze Associates accrued $8,500 of Service Revenue at December 31. Ocean Breeze Associates received $14,500 on January 15, including the accrued revenue recorded on December 31. Requirements 1. Record the adjusting entry to accrue Service Revenue. 2. Record the reversing entry. 3. Journalize the cash receipt.
Journal entries are as follows:
Accounts and Explanation
To record the accrued service revenue
To record reversing entry
To record receipt of service revenue
Adjusting entry will be recorded by debiting accounts receivable and crediting service revenue by $8,500, respectively.
Reversing entry will be recorded by debiting service revenue and crediting accounts receivable by $8,500, respectively.
Cash receipt will be recorded by debiting cash and crediting service revenue by $14,500, respectively.
The steps of the accounting cycle are presented below. Identify the correct order of the steps.
a. Journalize and post the closing entries.
b. Start with the beginning account balances.
c. Prepare the financial statements.
d. Compute the unadjusted balance in each account, and prepare the unadjusted trial balance.
e. Journalize and post adjusting entries.
f. Enter the unadjusted trial balance on the worksheet, and complete the worksheet (optional).
g. Prepare the adjusted trial balance.
h. Analyze and journalize transactions as they occur.
i. Post journal entries to the accounts.
j. Prepare the post-closing trial balance.
The adjusted trial balance of Melanie O’Mallie Dance Studio Company follows:MELANIE O'MALLIE DANCE STUDIO COMPANY Trial Balance August 31, 2018 Account Title Prepaid Rent Cash Debit Credit Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Dividends Common Stock Retained Earnings Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Supplies Expense Utilities Expense Balance $ 16,000 $ 76,100 $ 76,100 100 $ 5,700 4,800 49,000 5,400 18,100 5,000 18,000 19,000 1,100 1,100 3,600 1,800 1,500 500 400 1,100 Requirements 1. Prepare the classified balance sheet of Melanie O’Mallie Dance Studio Company at August 31, 2018. Use the report form. You must compute the ending balance of Retained Earnings. 2. Compute O’Mallie’s current ratio at August 31, 2018. One year ago, the current ratio was 1.76. Indicate whether O’Mallie’s ability to pay current debts has improved, deteriorated, or remained the same.
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