Recording adjustments for accrued and prepaid items and unearned income.
Based on the information below, record the adjusting journal entries that must be made for Garibaldi Consulting on June 30, 2016. The company has a June 30 fiscal year-end. Use 18 as the page number for the general journal.
a.–b. Merchandise Inventory, before adjustment, has a balance of $8,500. The newly counted inventory balance is $9,000.
c. Unearned Seminar Fees has a balance of $7,000, representing prepayment by customers for five seminars to be conducted in June, July, and August 2016. Two seminars had been conducted by June 30, 2016.
d. Prepaid Insurance has a balance of $18,000 for six months insurance paid in advance on May 1, 2016.
e. Store equipment costing $8,760 was purchased on March 31, 2016 It has a salvage value of $600, and a useful life of four years.
f. Employees have earned $350 that has not been paid at June 30, 2016.
g. The employer owes the following taxes on wages not paid at June 30, 2016: SUTA, $10.50; FUTA, $2.10; Medicare, $5.08; and social security, $21.70.
h. Management estimates uncollectible accounts expense at 1% of sales. This year’s sales were $3,000,000.
i. Prepaid Rent has a balance of $8,100 for six months’ rent paid in advance on March 1, 2016.
j. The Supplies account in the general ledger has a balance of $500. A count of supplies on hand at June 30, 2016 indicated $200 of supplies remain.
k. The company borrowed $10,100 from First Bank on June 1, 2016 and issued a four-month note. The note bears interest at 12%.
Analyze: After all adjusting entries have been journalized and posted, what is the balance of the Prepaid Rent account?
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