Question : 81) The Book Company had the following adjustments at December : 1230113

 

81) The Book Company had the following adjustments at December 31, the end of the accounting period:

A.The Book Company uses straight-line depreciation for its equipment. The amount of depreciation to be recorded for the equipment is $10,500.

B.Accrued interest of $2,000 on a note receivable will be received in January.

C.On November 1, The Book Company paid for five months of rent in advance and debited Prepaid Rent. Rent is $1,000 per month.

D.On August 1, the company collected $24,000 in advance for a consulting contract, which is to be earned evenly over the next 12 months. The original entry debited cash and credited unearned revenue.

E.Employees are owed salaries for 3 days of a 5 day workweek; weekly payroll is $30,000.

F.The unadjusted balance of the supplies account is $2,750. Based on a physical count, the cost of supplies on hand is $1,250.

G.The company has incurred interest expense of $850 that will be paid in January.

1.Journalize the adjusting entries.

2.Assuming the adjustments were not made, calculate the net overstatement or understatement this would have on net income. Would the company appear to be more or less profitable if the adjustments were not made?

 

82) Journalize the adjusting entries needed on December 31, the end of the current accounting period for Petra Industries using the following data:

A.The balance in Office Supplies before adjustment is $4,200. A physical count reveals $2,750 of supplies on hand at December 31.

B.A computer was purchased on January 1 for $12,000. The computer has a useful life of 3 years and is depreciated using the straight-line method.

C.A one-year insurance policy costing $5,400 was purchased on November 1.

D.Employee salaries are owed for 4 days of a regular 5 day work week. Weekly payroll is $13,600.

E.Unearned Maintenance Revenue has a balance of $21,000 before adjustment. Records show that $14,050 of that amount has been earned by December 31.

 

 

83) Eckle Ltd. has the following unadjusted trial balance as of March 31, 2012:

 

Account

Debit

Credit

Cash

        600

 

Accounts Receivable

      1,800

 

Inventory

      3,000

 

Store Supplies

      1,900

 

Prepaid Rent

      1,500

 

Land

    23,000

 

Building

    50,000

 

Accumulated Depreciation–Building

 

  7,500

Store Equipment

     27,000

 

Accumulated Depreciation–Store Equipment

 

15,625

Accounts Payable

 

6,000

Notes Payable

 

  2,500

Salaries Payable

 

 

Unearned Revenue

 

8,000

Common Stock

 

31,655

Retained Earnings

 

2,520

Revenue

 

35,000

Rent Expense

 

 

Store Supplies Expense

 

 

Salaries Expense

 

 

Depreciation Expense–Building

 

 

Depreciation Expense–Store Equipment

 

 

Totals

  $108,800

  $108,800

 

The following data is available from Mindy Meadows, Controller for Eckle Ltd.:

A)  Store Supplies used for the period were $1,225.

B)  The Building has been depreciated for three years; this year is year 4.

C)  The depreciation on the Store Equipment is $3,125 for the period.

D)  Prepaid Rent is for six months purchased on January 1, 2012.

E)  Forty percent of the Unearned Revenue has been earned.

F)  There are 8 employees, each receiving a salary of $2,000 per week for a five-day (Monday through Friday) week. March 31 is a Tuesday.

 

Prepare the appropriate adjusting journal entries.