Question

Problem 8 - Adjusting entry problem End of the Year 2010 Prepare adjusting entries for a company that prepares statements once per year on Dec. 31. 1. A $5000, 120 day loan was taken out at the bank on October 2, 2010. Interest on the loan is accrued at 6%. 2. The building was purchased June 1, 2008 for $100,000. At that time management assigned it a 20 year life and a $20,000 salvage value. 3. Insurance on the building of $4,800 was paid March 1, 2010 for a two-year period. 4. Revenue earned but not recorded at the end of the year is $5,000. 5. On Nov. 1, 2010, a client had paid $3000 in advance to have work done for 3 months. The work for November and December is completed. 6. A staff member counted the office supplies and found that there were $300 worth of supplies left on Dec. 31. On January 1, 2010 supplies costing $600 were on hand. An additional $1100 worth of supplies were purchased during 2010. 7. Employees are owed $3500 in salaries and wages at the end of the year. 8. Income taxes are calculated to be $1900. This amount is due on March 15, 2011. Cloring entry nrastise

Answer 1

Account Titles	Debit	Credit
Interest Expense	$                75		=5000*6%*90/360
Interest Payable		$                75
Depreciation Expense	$          4,000		=(100000-20000)/20
Accumulated Depreciation		$          4,000
Insurance Expense	$          2,000		=4800/24*10
Prepaid Insurance		$          2,000
Accounts Receivable	$          5,000
Service Revenue		$          5,000
Unearned Service Revenue	$          2,000
Service Revenue		$          2,000
Office Supplies Expense	$          1,400		=600+1100-300
Office Supplies		$          1,400
Salaries and Wages Expense	$          3,500
Salaries and Wages Payable		$          3,500
Income Tax Expense	$          1,900
Income Tax Payable		$          1,900

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