# 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.

### Intermediate Accounting: Reporting...

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

### Intermediate Accounting: Reporting...

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

#### Solutions

Chapter
Section
Chapter 3, Problem 3P
Textbook Problem

## Expert Solution

### Want to see the full answer?

Check out a sample textbook solution.See solution

### Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Solution

*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.