Question

Each of the following events describes acquiring an asset that requires a year-end adjusting entry. 1. Paid $16,000 cash on January 1 to purchase computer equipment to be used for administrative purposes. The equipment had an estimated expected useful life of four years and a $1,600 salvage value. 2. Paid $16,000 cash on January 1 to purchase manufacturing equipment. The equipment had an estimated expected useful life of four years and a $1,600 salvage value. Paid $15,600 cash in advance on May 1 for a one-year rental contract on administrative offices. , Paid $15,600 cash in advance on May 1 for a one-year rental contract on * manufacturing facilities. 5. Paid $2,500 cash to purchase supplies to be used by the marketing department. At the end of the year, $310 of supplies was still on hand. 6. Paid $2,500 cash to purchase supplies to be used in the manufacturing process. At the end of the year, $310 of supplies was still on hand. Required: Show how the adjusting entry affects the amount of net income shown on the year-end financial statements. Assume a December 31 annual closing date. The first event has been recorded as an example. Assume that any products that have been made have not been sold. (If there is no effect enter $0 in the cell.) Event No Net Income Amount of Change $ (3,600) 1. Adjusting entry 2. Adjusting entry 3. Adjusting entry 4. Adjusting entry 5. Adjusting entry 6. Adjusting entry

Answer 1

	Event no	Net income amount change
1	Adjusting entry	(3600)
2	Adjusting entry	0
3	Adjusting entry	(10400)	=15600*8/12
4	Adjusting entry	0
5	Adjusting entry	(2190)	=2500-310
6	Adjusting entry	0