Use the following information to provide the adjusting journal entry that Chipotle should have made on December 31, 2020which was the end of the fiscal year 2020. Assume that Chipotle makes adjusting entries once a year at fiscal year end.At the end of fiscal year 2020, Chipotle owed employees $203 million related to work completed (but not yet paid) during fiscal year 2020. What adjusting journal entry should Chipotle make on December 31, 2020 related to these wages owed to employees?Account TitleDebitCreditSalary expense203 Salary payable 203At the end of fiscal year 2020, Chipotle calculates that it has $105 million in sales on account that have not yet been received or recorded. What adjusting journal entry should Chipotle make on December 31, 2020 related to the sales on account? Account TitleDebitCreditAccounts receivable105 Sales revenue 105 Chipotle receives a utility bill every four weeks for the previous four weeks. On February 15, 2021, Chipotle receives a bill of $18 million covering the last three weeks of fiscal year 2020 and the first week of fiscal year 2021. Assuming that utilities are used evenly over the period, what adjusting journal entry should Chipotle make on December 31, 2020 related to this future utility bill? Account TitleDebitCreditUtilities expense 13.5 Utilities payable 13.5 Chipotle’s property and equipment depreciates $239 million during fiscal year 2020. Account TitleDebitCreditDepreciation239 Accumulated depreciation 239 On April 1, 2020, Chipotle paid $220 million for future adverting of its products. The ads will run over the subsequent 12-month period (i.e., April 1, 2020 to March 31, 2021). On April 1, Chipotle made the following journal entry:Dr. Prepaid Advertising 220 million Cr. Cash 220 million Chipotle did not make any journal entries related to the prepaid advertising after the initial journal entry shown above. What adjusting journal entry should Chipotle make on December 31, 2020 related to the prepaid advertising? Account TitleDebitCreditAdvertisement expense220 Prepaid advertisement 220 On January 1, 2020, Chipotle had $16 million in Supplies, and they purchased $35 million more in Supplies during fiscal year 2020. A year-end physical count of Chipotle’s supplies indicates that they have $23 million worth of Supplies remaining as of December 31, 2020. If Chipotle did not make journal entries when they used supplies during fiscal year 2020, what adjusting journal entry should Chipotle make related to its Supplies on December 31, 2020? Account TitleDebitCreditSupplies expenses28 Supplies 28 On October 1, 2020, Chipotle sold $168 million of gift cards to a corporate client. Chipotle assumes that these gift cards will be redeemed evenly each month over the next 24 months. On October 1, 2020, Chipotle made the following journal entry:Dr. Cash 168 million Cr. Unearned Revenue 168 million Gift cards were redeemed during October, November, and December, but Chipotle did not make any journal entries related to the unearned revenue after the initial journal entry shown above. What adjusting journal entry should Chipotle make on December 31, 2020 related to the unearned revenue? Account TitleDebitCreditUnearned revenue 84 Service revenue 84 This problem continues on the next page. For parts h-k, describe, when applicable, the impact (if the item is overstated or understated) on the items listed on the Income Statement (revenues or expenses and net income) and the items shown on the Balance Sheet (assets, liabilities, retained earnings, and stockholders’ equity). Note, when a few entries are listed in the same part, the impacts are the same for all of them. Put an “X” in the proper box. If there is no impact, leave the box blank. What is the effect on the income statement and the balance sheet if entries a) or c) were omitted? Income StatementBalance Sheet RevenuesExpensesNet IncomeAssetsLiabilitiesRE/SEUnderstated Overstated What is the effect on the income statement and the balance sheet if entry b) was omitted? Income StatementBalance Sheet RevenuesExpensesNet IncomeAssetsLiabilitiesRE/SEUnderstated Overstated What is the effect on the income statement and the balance sheet if entries d), or e) or f) were omitted? Income StatementBalance Sheet RevenuesExpensesNet IncomeAssetsLiabilitiesRE/SEUnderstated Overstated What is the effect on the income statement and the balance sheet if entry g) was omitted? Income StatementBalance Sheet RevenuesExpensesNet IncomeAssetsLiabilitiesRE/SEUnderstated Overstated

The adjustment entries are prepared to adjust the revenue and expenses of the current period.

Answered: the following information to provide…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Use the following information to provide the adjusting journal entry that Chipotle should have made on December 31, 2020which was the end of the fiscal year 2020. Assume that Chipotle makes adjusting entries once a year at fiscal year end.

At the end of fiscal year 2020, Chipotle owed employees $203 million related to work completed (but not yet paid) during fiscal year 2020. What adjusting journal entry should Chipotle make on December 31, 2020 related to these wages owed to employees?

Account Title	Debit	Credit
Salary expense	203
Salary payable		203

At the end of fiscal year 2020, Chipotle calculates that it has $105 million in sales on account that have not yet been received or recorded. What adjusting journal entry should Chipotle make on December 31, 2020 related to the sales on account?

Account Title	Debit	Credit
Accounts receivable	105
Sales revenue		105

Chipotle receives a utility bill every four weeks for the previous four weeks. On February 15, 2021, Chipotle receives a bill of $18 million covering the last three weeks of fiscal year 2020 and the first week of fiscal year 2021. Assuming that utilities are used evenly over the period, what adjusting journal entry should Chipotle make on December 31, 2020 related to this future utility bill?

Account Title	Debit	Credit
Utilities expense	13.5
Utilities payable		13.5

Chipotle’s property and equipment depreciates $239 million during fiscal year 2020.

Account Title	Debit	Credit
Depreciation	239
Accumulated depreciation		239

On April 1, 2020, Chipotle paid $220 million for future adverting of its products. The ads will run over the subsequent 12-month period (i.e., April 1, 2020 to March 31, 2021). On April 1, Chipotle made the following journal entry:

Dr. Prepaid Advertising		220 million
	Cr. Cash		220 million

Chipotle did not make any journal entries related to the prepaid advertising after the initial journal entry shown above. What adjusting journal entry should Chipotle make on December 31, 2020 related to the prepaid advertising?

Account Title	Debit	Credit
Advertisement expense	220
Prepaid advertisement		220

On January 1, 2020, Chipotle had $16 million in Supplies, and they purchased $35 million more in Supplies during fiscal year 2020. A year-end physical count of Chipotle’s supplies indicates that they have $23 million worth of Supplies remaining as of December 31, 2020. If Chipotle did not make journal entries when they used supplies during fiscal year 2020, what adjusting journal entry should Chipotle make related to its Supplies on December 31, 2020?

Account Title	Debit	Credit
Supplies expenses	28
Supplies		28

On October 1, 2020, Chipotle sold $168 million of gift cards to a corporate client. Chipotle assumes that these gift cards will be redeemed evenly each month over the next 24 months. On October 1, 2020, Chipotle made the following journal entry:

Dr. Cash		168 million
	Cr. Unearned Revenue		168 million

Gift cards were redeemed during October, November, and December, but Chipotle did not make any journal entries related to the unearned revenue after the initial journal entry shown above. What adjusting journal entry should Chipotle make on December 31, 2020 related to the unearned revenue?

Account Title	Debit	Credit
Unearned revenue	84
Service revenue		84

This problem continues on the next page.

For parts h-k, describe, when applicable, the impact (if the item is overstated or understated) on the items listed on the Income Statement (revenues or expenses and net income) and the items shown on the Balance Sheet (assets, liabilities, retained earnings, and stockholders’ equity). Note, when a few entries are listed in the same part, the impacts are the same for all of them. Put an “X” in the proper box. If there is no impact, leave the box blank.

What is the effect on the income statement and the balance sheet if entries a) or c) were omitted?

	*Income Statement*	*Balance Sheet*
	Revenues	Expenses	Net Income	Assets	Liabilities	RE/SE
Understated
Overstated

What is the effect on the income statement and the balance sheet if entry b) was omitted?

	*Income Statement*	*Balance Sheet*
	Revenues	Expenses	Net Income	Assets	Liabilities	RE/SE
Understated
Overstated

What is the effect on the income statement and the balance sheet if entries d), or e) or f) were omitted?

	*Income Statement*	*Balance Sheet*
	Revenues	Expenses	Net Income	Assets	Liabilities	RE/SE
Understated
Overstated

What is the effect on the income statement and the balance sheet if entry g) was omitted?

	*Income Statement*	*Balance Sheet*
	Revenues	Expenses	Net Income	Assets	Liabilities	RE/SE
Understated
Overstated

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here