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12 May, 20:29

All of the current year's entries for Zimmerman Company have been made, except the following adjusting entries. The company's annual accounting year ends on December 31. On September 1 of the current year, Zimmerman collected six months' rent of $9,600 on storage space. At that date, Zimmerman debited Cash and credited Unearned Rent Revenue for $9,600. On October 1 of the current year, the company borrowed $18,000 from a local bank and signed a one-year, 12 percent note for that amount. The principal and interest are payable on the maturity date. Depreciation of $3,500 must be recognized on a service truck purchased in July of the current year at a cost of $22,000.

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  1. 12 May, 22:06
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    prepaid rent 6,400 debit

    rent revenue 6,400 credit

    --to record accrued rent revenue--

    interest expense 540 debit

    interest payable 540 credit

    --to record accrued interest on the note--

    depreciation expense 3,500 debit

    accumulated depreciation-truck 3,500 credit

    --to record the depreciation on company's truck--

    Explanation:

    earned rent:

    9,600 for six months: 9,600 / 6 = 1,600 dollars per month

    months from September 1st to December 31th: 4 months

    earned rent revenue: 1,600 x 4 = 6,400 dollars

    interest acrued on the note:

    principal x rate x time

    18,000 x 0.12 x 3/12 = 540

    we ddebit the expense and credit the payable

    depreciation:

    for the amount stated we debit the expense and credit the accumulated depreciation
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