Problem

Determining Financial StatementEffects of Three AdjustingEntriesTerbish Company started op...

Determining Financial StatementEffects of Three AdjustingEntries

Terbish Company started operations on January 1, 2012. It is now December 31, 2012, the end of the annual accounting period. The part-time bookkeeper need s your help to analyze the following three transactions:

a. During 2012, the company purchased office supplies that cost $1.600. At the end of 2012, office supplies of $400 remained on hand .

b.On January 1, 2012, the company purchased a special machine for cash at a cost of $12.000. The machine’s cost is estimated to depreciate at $1,200 per year.

c. On July 1. 2012, the company paid cash of $600 for a two-year premium on an insurance policy on the machine: cove rage begins on July 1. 2012.

Required: 

Complete the following schedule with the amounts that should be reported for 2012:

Selected Balance Sheet Accounts at December 31,2012

Amount to Be Reported

Assets

$-

Equipment

-

Accumulated depreciation

-

Net book value of equipment

-

Office supplies

-

Prepaid insurance

-

Selected Income Statement Accounts for the Year Ended December 31, 2012

 

Expenses

$-

Depreciation expense

-

Office supplies expense

-

Insurance expense

-

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