ay, March 24th
The following information relates to the December 31 adjustments for Water Works, a firm providing
waterproofing services for commercial and residential customers. The firm's fiscal year ends December
31 and no adjustments have been made during the year.
1. The firm paid a $2,340 premium for a 1-year insurance policy, coverage to begin November 1. The
premium payment was debited to Insurance Expense.
2. Weekly wages for a 5-day work week total $1,225, payable on Fridays. December 31 is Wednesday.
3. Water Works received $3,600 in November for services to be performed during December through
February of the following year. When received, this amount was credited to Unearned Service Fees. By
December 31, one-fourth of this amount was earned.
4. Water Works receives a 10% commission from the manufacturer on sales of waterproofing agent to
Water Work's customers. By December 31, Water Works had sales of $9,000 (during November and
December) for which no commissions had been received or recorded.
5. On December 31, the Supplies Expense account has a balance of $16,900 and the Supplies account
has a balance of $2,500. A count of supplies on December 31 indicates that $3,500 worth of supplies
are still on hand.
6. A customer couldn't pay his bill so on December 1st, Water Works accepted a 6%, 3-month, $40,000
note from John Smith.
7. Water Works rents parking spaces in its lot to firms in the office building next door. On December 1,
Water Works received $10,000 as advance payments to cover parking privileges in the lot for December
through March of the following year. When received, the $10,000 was credited to Parking Fees Earned.
8. During December, fuel oil costs of $495 were incurred to heat the firm's buildings. Because the
monthly bill from the oil company has not yet arrived, no entry has been made for this amount (fuel oil
costs are charged to Utilities Expense).
9. On September 1, the company entered into an equipment maintenance contract. Water Works paid
$3,000 to cover maintenance service for six months, beginning September 1. The $3,000 payment was
debited to Prepaid Maintenance.
REQUIRED: Using the information above, prepare December 31st adjusting entries for Water Works.
Be sure to label each adjustment using numbers 1 through 9.
