Note: Assume the accounting (fiscal) year ends on December 31st.
Situation one
A one-year insurance policy was purchased on August 1 for $1,800 and the followng entry was made at that time"
Prepaid Insurance 1,800 Cash 1,800
Show the adjusting entry at December 31 in the General Journal Sheet that follows.
Situation two
Supplies were purchased for cash on May 2, 2017, for & 7,500. Show how this purchase would be recorded. Then show the adjusting entry that would be necessary, assuming that $2,500 of the supplies remained at the end of the year. Use the General Journal Sheet that follows.
Situation three
Assume that a company acquired a building on January 1, 2017, at a cost of $2,000,000. The building had an estimated life of 40 years and an estimated salvage value of $400,000. What adjusting entry is needed on December 31, 2017, to record the depreciation for the entire year 2017? Record your entry on the General Journal that follows.
Situation four
On September 1, 2017, Professional Bowler Journal, Inc. received a total of $480,000 as payment in advance for one-year subscriptions to a monthly magazine. A liability account was credited to record this cash receipt. By the end of the year, one third of the magazines paid for in advance had been delivered. Give the entries to record the receipt of the subscription fees and to adjust the accounts at December 31, assuming annual financial statements are prepared at year-end. Use the General Journal that follows.
Situation five
A firm borrowed $20,000 on November 1. By December 31, $400 of interest had been incurred. Prepare the adjusting entry required on December 31. Use the General Journal that follows.