A partial trial balance of Julie Hartsack Corporation is as follows on December 31, 2021.   Dr. Cr. Supplies $  2,700   Salaries and wages payable   $  1,500 Interest receivable 5,100   Prepaid insurance 90,000   Unearned rent   –0–   Interest payable   15,000 Additional adjusting data: 1. A physical count of supplies on hand on December 31, 2021, totaled $1,100. 2. Through oversight, the Salaries and Wages Payable account was not changed during 2021. Accrued salaries and wages on December 31, 2021, amounted to $4,400. 3. The Interest Receivable account was also left unchanged during 2021. Accrued interest on investments amounts to $4,350 on December 31, 2021. 4. The unexpired portions of the insurance policies totaled $65,000 as of December 31, 2021. 5. $28,000 was received on January 1, 2021, for the rent of a building for both 2021 and 2022. The entire amount was credited to rent revenue. 6. Depreciation on equipment for the year was erroneously recorded as $5,000 rather than the correct figure of $50,000. 7. A further review of depreciation calculations of prior years revealed that equipment depreciation of $7,200 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment. Instructions a.    Assuming that the books have not been closed, what are the adjusting entries necessary at December 31, 2021? (Ignore income tax considerations.) b.    Assuming that the books have been closed, what are the adjusting entries necessary at December 31, 2021? (Ignore income tax considerations.) c.    Repeat the requirements for items 6 and 7, taking into account income tax effects (40% tax rate) and assuming that the books have been closed.

Question

A partial trial balance of Julie Hartsack Corporation is as follows on December 31, 2021.

 
Dr.
Cr.
Supplies
$  2,700
 
Salaries and wages payable
 
$  1,500
Interest receivable
5,100
 
Prepaid insurance
90,000
 
Unearned rent
 
–0–  
Interest payable
 
15,000

Additional adjusting data:

  • 1. A physical count of supplies on hand on December 31, 2021, totaled $1,100.
  • 2. Through oversight, the Salaries and Wages Payable account was not changed during 2021. Accrued salaries and wages on December 31, 2021, amounted to $4,400.
  • 3. The Interest Receivable account was also left unchanged during 2021. Accrued interest on investments amounts to $4,350 on December 31, 2021.
  • 4. The unexpired portions of the insurance policies totaled $65,000 as of December 31, 2021.
  • 5. $28,000 was received on January 1, 2021, for the rent of a building for both 2021 and 2022. The entire amount was credited to rent revenue.
  • 6. Depreciation on equipment for the year was erroneously recorded as $5,000 rather than the correct figure of $50,000.
  • 7. A further review of depreciation calculations of prior years revealed that equipment depreciation of $7,200 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment.

Instructions

a.    Assuming that the books have not been closed, what are the adjusting entries necessary at December 31, 2021? (Ignore income tax considerations.)

b.    Assuming that the books have been closed, what are the adjusting entries necessary at December 31, 2021? (Ignore income tax considerations.)

c.    Repeat the requirements for items 6 and 7, taking into account income tax effects (40% tax rate) and assuming that the books have been closed.

 

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