1. On the designated worksheet, prepare in journal entry form the adjusting journal entries for the following items.
A. On April 30, 2009 a 12-month insurance policy was purchased for $12,000.
B. On January 1, 2009, Hullie & Oates paid Gretsky Advertising $36,000 for two years of advertising services. Equal services are provided in year 1 and year 2.
C. Hullie & Oates needed some additional storage space so on November 1, 2009 they rented a unit for an annual rate of $16,000. The entire amount was expensed when paid.
D. $4,250 of store supplies were purchased during the year and the asset store supplies was increased. $3,850 of these supplies was used during the year.
E. $7,500 of office supplies were purchased during the year and were immediately expensed. $1,500 of these supplies remained at the end of 2009.
F. On July 1, 2009, Hullie & Oates issued a 9-month note receivable to Shanahan & Co. At an annual interest rate of 7%. Principle and interest will be paid at the end of the 9-months. The note was recorded in Notes Receivable and is the only note outstanding.
G. Depreciation for the year is based on the following:Straight line depreciation.Store equipment Assets were held for the entire year; Residual Value = $8,000; Service life is estimated to be 10 years.
Office equipment Assets were held for the entire year; Residual Value = $4,000; Service life is estimated to be 5 years.
H. Sales salaries of $6,200 and office salaries of $4,800 remained unpaid at 12/31/09.
I. On October 1, 2009, Hullie & Oates rented a portion of one store to Twist & Chase Co. The contract was for 10 months and Hullie & Oates required the 10 months of cash upfront on October 1st. The rent is being earned equally over the next 10 months. When cash was received, unearned rent was appropriately recorded.
J. The note payable was outstanding the entire year and a 5.5% interest rate exists on the note. No interest has been recorded for the year.
K. At 12/31/2009, based on the aging method, Hullie & Oates determines that uncollectible accounts are $8,250.