Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Below are four scenarios for a local Midas Muffler shop for the month of December.
Scenario 1: On December 1, the balance of maintenance supplies totals $400. On December 15, the shop purchases an additional $200 of maintenance supplies with cash. By the end of December, only $100 of maintenance supplies remain.
Scenario 2: On December 4, Midas receives $6,000 cash from a local moving company in
an agreement to provide truck maintenance of $1,000 each month for the next six months, beginning in December.
Scenario 3: Mechanics have worked the final four days in December, earning $600, but have not yet been paid. Midas plans to pay its mechanics on January 2.
Scenario 4: Customers receiving $250 of maintenance services from Midas on December 29 have not been billed as of the end of the month. These customers will be billed on January 3 and are expected to pay the full amount owed on January 6.
Required:
For each of the scenarios:
1. Indicate the type of
2. Record the transaction described and the December 31 adjusting entry.
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