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Group 7: Heather Broadwell Jimmy Ha Brittany Spangler William Quan Linda Yin

This chapter focuses on the transactions completed by Curb Company in 2006 and the preparation of journal entries and adjusting entries for current liabilities.

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Group 7: Heather Broadwell Jimmy Ha Brittany Spangler William Quan Linda Yin

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  1. Group 7:Heather BroadwellJimmy HaBrittany SpanglerWilliam QuanLinda Yin Chapter 9: P9-1

  2. P9-1: Recording & Reporting Current Liabilities • Curb Company completed various transactions during 2006. • The annual accounting period ends December 31, 2006. • Prepare journal entries for each transaction. • Prepare all adjusting entries required on December 31, 2006.

  3. 1/15/06: Purchased and paid for merchandise for resale at an invoice cost of $13,580; assume a periodic inventory system. Journal Entry: Purchases (+A) $13,580 Cash (-A) $13,580

  4. 4/1/06: Borrowed $500,000 from Summit Bank for general use; executed an 11-month, 8% interest-bearing note payable. Journal Entry: Cash (+A) $500,000 Notes Payable (+L) $500,000

  5. 6/14/06: Received a $10,000 customer deposit from Mark Muller for services to be performed in the future. Journal Entry: Cash (+A) $10,000 Unearned service rev. (+L) $10,000

  6. 7/15/06: Performed $2,500 of the services paid for by Muller. Journal Entry: Unearned service rev. (-L) $2,500 Service revenue (+R, +SE) $2,500

  7. 12/12/06: Received electric bill for $540. The company will pay it in early January. Journal Entry: Utilities Expense (+E, -SE) $540 Accrued Exp. Payable (+L) $540

  8. 12/31/06: Determined wages of $12,000 earned but not yet paid on Dec. 31 (disregard payroll taxes). Journal Entry: Wages Expense (+E, -SE) $12,000 Accrued Exp. Payable (+L) $12,000

  9. Adjusting entries required on December 31 2006: Interest expense for 2006: $500,000 x 8% x 9/12 = $30,000 Journal Entry: Interest Expense (+E, -SE) $30,000 Accrued Exp. Payable (+L) $30,000

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