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Adjusting Entries Sarah Company’s trial balance on December 31 (the end of its annual accounting period), included the following account balances before adjustments: Reviewing the company’s recorded transactions and accounting records, you find the following data pertaining to the December 31 adjustments: 1. On July 2, the company had accepted a $10,000, 9-month, 10% (annual rate) note receivable from a customer. The interest is to be collected when the note is collected. 2. On August 2, the company had paid $3,000 for a 2-year insurance policy. 3. The building was acquired 10 years ago and is being depreciated using the straight-line method over a 25-year life. It has an estimated residual value of $8,000. 4. The delivery equipment was purchased on April 2. It is to be depreciated using the straight-line method over a 10-year life, with an estimated residual value of $2,000. 5. On September 1, the company had received 2 years’ rent in advance ($4,320) for a portion of a building it is renting to Victoria Company. 6. On December 1, the company had issued a $7,200, 3-month, 12% (annual rate) note payable to a supplier. The interest is to be paid when the note is paid. 7. On January 2, the company purchased $1,000 of office supplies. A physical count on December 31 revealed that there are $400 of office supplies still on hand. No supplies were on hand at the beginning of the year. Required: Prepare the adjusting entries that are necessary to bring Sarah’s accounts up to date on December 31. Each journal entry explanation should summarize your calculations.

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281
BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281

Solutions

Chapter
Section
Chapter 3, Problem 3P
Textbook Problem

Adjusting Entries Sarah Company’s trial balance on December 31 (the end of its annual accounting period), included the following account balances before adjustments:

Chapter 3, Problem 3P, Adjusting Entries Sarah Companys trial balance on December 31 (the end of its annual accounting

Reviewing the company’s recorded transactions and accounting records, you find the following data pertaining to the December 31 adjustments:

  1. 1. On July 2, the company had accepted a $10,000, 9-month, 10% (annual rate) note receivable from a customer. The interest is to be collected when the note is collected.
  2. 2. On August 2, the company had paid $3,000 for a 2-year insurance policy.
  3. 3. The building was acquired 10 years ago and is being depreciated using the straight-line method over a 25-year life. It has an estimated residual value of $8,000.
  4. 4. The delivery equipment was purchased on April 2. It is to be depreciated using the straight-line method over a 10-year life, with an estimated residual value of $2,000.
  5. 5. On September 1, the company had received 2 years’ rent in advance ($4,320) for a portion of a building it is renting to Victoria Company.
  6. 6. On December 1, the company had issued a $7,200, 3-month, 12% (annual rate) note payable to a supplier. The interest is to be paid when the note is paid.
  7. 7. On January 2, the company purchased $1,000 of office supplies. A physical count on December 31 revealed that there are $400 of office supplies still on hand. No supplies were on hand at the beginning of the year.

Required:

Prepare the adjusting entries that are necessary to bring Sarah’s accounts up to date on December 31. Each journal entry explanation should summarize your calculations.

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Chapter 3 Solutions

Intermediate Accounting: Reporting And Analysis
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Ch. 3 - Give examples of transactions that: a. Increase...Ch. 3 - What different purposes do the general journal and...Ch. 3 - What is the purpose of a trial balance?Ch. 3 - Define the following: a. account b. contra account...Ch. 3 - What are adjusting entries, and why are they...Ch. 3 - Explain and provide examples of deferrals,...Ch. 3 - Explain why companies sometimes recognize...Ch. 3 - Explain why companies sometimes recognize accruals...Ch. 3 - Give two examples of adjusting entries to record...Ch. 3 - What is a periodic inventory system? How is cost...Ch. 3 - What is the difference between a trial balance and...Ch. 3 - What are the major financial statements of a...Ch. 3 - What are closing entries, and what is their...Ch. 3 - What is the purpose of the Income Summary account...Ch. 3 - What is a worksheet? How does the use of a...Ch. 3 - What are reversing entries, and why are they used?Ch. 3 - Give an example of an adjusting entry and a...Ch. 3 - What are subsidiary ledgers and control accounts,...Ch. 3 - What are special journals, and why are they used?...Ch. 3 - What is cash-basis accounting? What must a company...Ch. 3 - On May 1, Johnson Corporation purchased inventory...Ch. 3 - On January 1, Tolson Company purchased a building...Ch. 3 - On July 1, Friler Company purchased a 1-year...Ch. 3 - On October 1, Bandor Company sold land (that cost...Ch. 3 - Garcia Company rents out a portion of its building...Ch. 3 - On April 1, Ringo Company borrowed 20,000 from its...Ch. 3 - Goldfinger Corporation had account balances at the...Ch. 3 - Using the information from RE3-7, prepare...Ch. 3 - For the current year, Vidalia Company reported...Ch. 3 - Use the information in RE3-6, (a) assuming Ringo...Ch. 3 - (Appendix 3.1) Vickelly Company uses cash-basis...Ch. 3 - Financial Statement Interrelationship Draw a...Ch. 3 - Journal Entries Mead Company uses a perpetual...Ch. 3 - Journal Entries The following are selected...Ch. 3 - Adjusting Entries Your examination of Sullivan...Ch. 3 - Adjusting Entries The following are several...Ch. 3 - Adjusting Entries The following partial list of...Ch. 3 - Basic Income Statement The following are selected...Ch. 3 - Periodic Inventory System Raynolde Company uses a...Ch. 3 - Closing Entries Lloyd Bookstore shows the...Ch. 3 - Financial Statements Turtle Company has prepared...Ch. 3 - Worksheet for Service Company Whitaker Consulting...Ch. 3 - Worksheet, Including Inventory Surian Motors...Ch. 3 - Reversing Entries On December 31, 2019, Kellams...Ch. 3 - Special Journals The following are several...Ch. 3 - (Appendix 3.1) Cash-Basis Accounting Puntarelli...Ch. 3 - Adjusting Entries The following information is...Ch. 3 - Adjusting Entries Clapton Guitar Company entered...Ch. 3 - Adjusting Entries Sarah Companys trial balance on...Ch. 3 - Income Statement Calculations Taylor Company uses...Ch. 3 - Errors in Financial Statements At the end of the...Ch. 3 - Journal Entries, Posting, and Trial Balance Luke...Ch. 3 - Effects of Errors: During the current accounting...Ch. 3 - Financial Statements Mackenzie Inc. uses a...Ch. 3 - Financial Statements Carolyn Company has prepared...Ch. 3 - Worksheet Victoria Company has the following...Ch. 3 - Worksheet Devlin Company has prepared the...Ch. 3 - Comprehensive On November 30, 2019. Davis Company...Ch. 3 - Reversing Entries Thomas Company entered into two...Ch. 3 - Reversing Entries On December 31, 2019, Mason...Ch. 3 - Adjusting Entries At the end of 2019, Richards...Ch. 3 - Comprehensive (Appendix 3.1) Presented below is...Ch. 3 - Comprehensive (Appendix 3.1) Dawson OConnor is the...

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