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    Relic Spotter Inc. Case: Transaction 25

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    osogboandrew_9480574
    The document discusses several journal entries made at December 31, 2012 for Relic Spotter Inc. Specifically: 1) An entry was made to recognize $4,000 of prepaid advertising expense for the period, by debiting Advertising Expense and crediting Prepaid Advertising. 2) An entry recognized $250 of interest revenue on a loan to Park, by debiting Interest Receivable and crediting Interest Revenue. 3) An entry recognized $100 of unearned rental revenue for the period, by debiting Unearned Rental Revenue and crediting Rental Revenue. 4) A final entry recognized $630 of estimated income tax expense, by debiting Income Tax Expense and crediting

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    Relic Spotter Inc. Case: Transaction 25

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    osogboandrew_9480574
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    The document discusses several journal entries made at December 31, 2012 for Relic Spotter Inc. Specifically: 1) An entry was made to recognize $4,000 of prepaid advertising expense for the period, by debiting Advertising Expense and crediting Prepaid Advertising. 2) An entry recognized $250 of interest revenue on a loan to Park, by debiting Interest Receivable and crediting Interest Revenue. 3) An entry recognized $100 of unearned rental revenue for the period, by debiting Unearned Rental Revenue and crediting Rental Revenue. 4) A final entry recognized $630 of estimated income tax expense, by debiting Income Tax Expense and crediting

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    The document discusses several journal entries made at December 31, 2012 for Relic Spotter Inc. Specifically: 1) An entry was made to recognize $4,000 of prepaid advertising expense for the period, by debiting Advertising Expense and crediting Prepaid Advertising. 2) An entry recognized $250 of interest revenue on a loan to Park, by debiting Interest Receivable and crediting Interest Revenue. 3) An entry recognized $100 of unearned rental revenue for the period, by debiting Unearned Rental Revenue and crediting Rental Revenue. 4) A final entry recognized $630 of estimated income tax expense, by debiting Income Tax Expense and crediting

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    © All Rights Reserved
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    Download as pdf or txt
    31 views8 pages

    Relic Spotter Inc. Case: Transaction 25

    Uploaded by

    osogboandrew_9480574
    The document discusses several journal entries made at December 31, 2012 for Relic Spotter Inc. Specifically: 1) An entry was made to recognize $4,000 of prepaid advertising expense for the period, by debiting Advertising Expense and crediting Prepaid Advertising. 2) An entry recognized $250 of interest revenue on a loan to Park, by debiting Interest Receivable and crediting Interest Revenue. 3) An entry recognized $100 of unearned rental revenue for the period, by debiting Unearned Rental Revenue and crediting Rental Revenue. 4) A final entry recognized $630 of estimated income tax expense, by debiting Income Tax Expense and crediting

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    of 8

    Relic Spotter Inc.

    Case: Transaction 25
    (25) What about the prepaid advertising account?
    Recall that, in transaction (9), Park paid $8,000 upfront on June 30,
    2012 for advertising through June 30, 2013
    Journal Entry
    (25) 12/31/12 Dr. Advertising Expense (+E, -SE)
    Cr. Prepaid Advertising (-A)
    8,000 * 1/2 year = 4,000

    KNOWLEDGE FOR ACTION

    4,000
    4,000

    Relic Spotter Inc. Case: Transaction 25


    Journal Entry
    (25) 12/31/12 Dr. Advertising Expense (+E, -SE)
    Cr. Prepaid Advertising (-A)

    Prepaid Advertising (A)


    (9)

    8,000

    KNOWLEDGE FOR ACTION

    4,000 (25)

    Advertising Expense (E, SE)


    (25)

    4,000

    4,000
    4,000

    Relic Spotter Inc. Case: Transaction 26


    (26) What about the notes receivable account?
    Recall that, in transaction (10), Park borrowed $5,000 from Relic
    Spotter at 10% interest on June 30, 2012, with the principal and
    interest due in a lump sum on June 30, 2013
    Journal Entry
    (26) 12/31/12 Dr. Interest Receivable (+A)
    Cr. Interest Revenue (+R, +SE)
    5,000 * 10% = 500
    500 * 1/2 year = 250

    KNOWLEDGE FOR ACTION

    250
    250

    Relic Spotter Inc. Case: Transaction 26


    Journal Entry
    (26) 12/31/12 Dr. Interest Receivable (+A)
    Cr. Interest Revenue (+R, +SE)

    Interest Receivable (A)


    (26)

    250

    KNOWLEDGE FOR ACTION

    250
    250

    Interest Revenue (R, SE)


    250

    (26)

    Relic Spotter Inc. Case: Transaction 27


    (27) What about the unearned revenue account?
    Recall that, in transaction (15), the Penn Antiquities Club paid Relic
    Spotter $1,200 cash upfront on December 1, 2012 for unlimited
    rentals over the next year
    Journal Entry
    (27) 12/31/12 Dr. Unearned Rental Revenue (-L)
    Cr. Rental Revenue (+R, +SE)
    1,200 * 1/12 year = 100

    KNOWLEDGE FOR ACTION

    100
    100

    Relic Spotter Inc. Case: Transaction 27


    Journal Entry
    (27) 12/31/12 Dr. Unearned Rental Revenue (-L)
    Cr. Rental Revenue (+R, +SE)

    Unearned Rental Revenue (L)


    100

    (27)

    1,200

    (15)

    100

    Rental Revenue (R, SE)


    124,300 (16)
    100

    KNOWLEDGE FOR ACTION

    100

    (27)

    Relic Spotter Inc. Case: Transaction 28


    (28) Finally, the accountant noted that Relic Spotter incurred an
    estimated income tax expense of $630 for 2012 (Park was also
    confused by this because she did not do her taxes until April)
    Journal Entry
    (28) 12/31/12 Dr. Income Tax Expense (+E, -SE)
    Cr. Income Taxes Payable (+L)

    KNOWLEDGE FOR ACTION

    630
    630

    Relic Spotter Inc. Case: Transaction 28


    Journal Entry
    (28) 12/31/12 Dr. Income Tax Expense (+E, -SE)
    Cr. Income Taxes Payable (+L)

    Income Taxes Payable (L)


    630

    KNOWLEDGE FOR ACTION

    (28)

    630

    Income Tax Expense (E, SE)


    (28)

    630

    630

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