Question

Adjusting Entries 1. On January 1, 2010, Smith Corporation purchased Supplies at a cost of $5,200 and debited an asset. A count of the Supplies inventory on January 31, 2000 showed $1,700 of supplies still on hand. Prepare the adjusting entry on January 31, 2000. 2. Paul's Flower Delivery Service purchased a Delivery Truck at a cost of $30,000 (cash) on January 1, 2000. The truck is estimated to have depreciation expense of $4,000 each year. Prepare the adjusting entry that would be necessary on December 31, 2000. 3. Adams Barber Shop purchased insurance coverage on January 1, 2000 for two years at a cost of $2,200. Adams recorded the transaction as a prepaid asset. Prepare the required adjusting entry on Adams' Books at December 31, 2000. 4. On June 1, 2000, Rollins Corporation borrowed $36,000 from the East Side Bank and signed a 2 year promissory note payable with interest at 10%. Interest and principal are due on May 31, 2002. Prepare the adjusting entry on December 31, 2000. 5. The employees at Grand Corporation work a five day week (Monday thru Friday) and are paid each Monday for the previous weeks work. The average weekly payroll is $29,000. Prepare the necessary adjusting entry as of the end of the day on Wednesday, December 31, 2000, the end of Grand's accounting period. 6. During September 2000, RealTech Corporation sold for cash, 50, one year Internet access contracts for $400 each. RealTech recorded the contracts appropriately as a liability. Contracts are effective as of October 1, 2000. Prepare the necessary adjusting entry on December 31, 2000. 7. On August 1, 2000, Madison Real Estate Company received $18,000 for a one year lease starting on that date. Madison recorded the event appropriately as a liability. Prepare the necessary journal entry on Madison's books at December 31, 2000.

Answer 1

S No	Date	Account Titles	Debit	Credit
1	Jan 1,2010	Supplies expense	3500
		Supplies		3500
		[5200-1700]
2	Dec 31,2000	Depreciation expense - Delivery Truck	4000
		Accumulated depreciation- Delivery truck		4000
3	Dec 31,2000	Insurance expense	1100
		Prepaid Insurance		1100
4	Dec 31,2000	Interest expense	2100
		Interest payable		2100
		[36000*10%*7/12]
5	Dec 31,2000	Salaries expense	29000
		Salaries payable		29000
6	Dec 31,2000	Unearned service revenue	5000
		Service revenue		5000
		[50*400*3/12]
7	Dec 31,2000	Unearned lease revenue	7500
		Lease revenue		7500
		[18000*5/12]