Sentry Transport Inc. of Atlanta provides in-town parcel delivery services in addition to a fullrange of passenger services. Sentry engaged in the following activities during the current year:a. Sentry received $5,000 cash in advance from Rich’s Department Store for an estimated 250deliveries during December 2019 and January and February of 2020. The entire amountwas recorded as unearned revenue when received. During December 2019, 110 deliverieswere made for Rich’s.b. Sentry operates several small buses that take commuters from suburban communities to thecentral downtown area of Atlanta. The commuters purchase, in advance, tickets for 50 onewayrides. Each 50-ride ticket costs $500. At the time of purchase, Sentry credits the cashreceived to unearned revenue. At year end, Sentry determines that 10,160 one-way rideshave been taken.c. Sentry operates several buses that provide transportation for the clients of a social service agencyin Atlanta. Sentry bills the agency quarterly at the end of January, April, July, and October forthe service performed that quarter. The contract price is $7,500 per quarter. Sentry follows thepractice of recognizing revenue from this contract in the period in which the service is performed.d. On December 23, Delta Airlines chartered a bus to transport its marketing group to a meetingat a resort in southern Georgia. The meeting will be held during the last week in January2020, and Delta agrees to pay for the entire trip on the day the bus departs. At year end,none of these arrangements have been recorded by Sentry.Required:1. Prepare adjusting entries at December 31 for these four activities.2. CONCEPTUAL CONNECTION What would be the effect on revenue if the adjustingentries were not made?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Sentry Transport Inc. of Atlanta provides in-town parcel delivery services in addition to a full
range of passenger services. Sentry engaged in the following activities during the current year:
a. Sentry received $5,000 cash in advance from Rich’s Department Store for an estimated 250
deliveries during December 2019 and January and February of 2020. The entire amount
was recorded as unearned revenue when received. During December 2019, 110 deliveries
were made for Rich’s.
b. Sentry operates several small buses that take commuters from suburban communities to the
central downtown area of Atlanta. The commuters purchase, in advance, tickets for 50 oneway
rides. Each 50-ride ticket costs $500. At the time of purchase, Sentry credits the cash
received to unearned revenue. At year end, Sentry determines that 10,160 one-way rides
have been taken.
c. Sentry operates several buses that provide transportation for the clients of a social service agency
in Atlanta. Sentry bills the agency quarterly at the end of January, April, July, and October for
the service performed that quarter. The contract price is $7,500 per quarter. Sentry follows the
practice of recognizing revenue from this contract in the period in which the service is performed.
d. On December 23, Delta Airlines chartered a bus to transport its marketing group to a meeting
at a resort in southern Georgia. The meeting will be held during the last week in January
2020, and Delta agrees to pay for the entire trip on the day the bus departs. At year end,
none of these arrangements have been recorded by Sentry.
Required:
1. Prepare adjusting entries at December 31 for these four activities.
2. CONCEPTUAL CONNECTION What would be the effect on revenue if the adjusting
entries were not made?
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