Answer to Question #216121 in Accounting for zuby

Question

Determine if the following transactions for Marlin Corporation require an adjustment or not. If an adjusting entry is required, give the correct entry.

1.

At the beginning of the month, Marlin agreed to perform services for the next three months for Catsui Corporation for $30,000 per month. Catsui paid Marlin $90,000 in advance. One month has now passed.

2.

Marlin pays its employees every two weeks. At the end of the month, Marlin owes its employees $480,000, but will not pay them until the following week.

3.

Marlin paid $300,000 for rent at the beginning of the month by debiting prepaid rent and crediting cash. The $300,000 covered six months of occupancy, but only one month has passed.

4.

At the beginning of the month, Marlin agreed to perform services for Ryland Company for

127 Financial Accounting

$16,000 per month for the next six months. Ryland has not yet paid any cash to Marlin and the work is not substantially complete.

Answer 1

The determination can be done in table form as shown below