Lexi Corporation adjusts its accounts only at year-end. Prior to making their year-end adjustments, Lexi had a Net Income of $65,000. The following information is available as a source for preparing the adjusting entries at December 31, 2010:
1. Lexi rented some office space beginning November 1 at a rate of $2,700 per month.On that date Lexi was required to pay three months rent in advance. Prepaid rent was debited for the amount.
2. On November 1, Lexi borrowed $200,000 from the bank by signing a 9% note. The principal and interest are due and payable at maturity, which is in four months.
3. Lexi operates five days per week with an average daily payroll of $1,200. Payroll is paid bi-weekly (every other week). The last payroll payment was made on Friday, December 24.
For each of the above numbered items, prepare the necessary adjusting journal entry in good form. For any item requiring a computation, show your computation under the entry. If no adjusting entry is required, explain why.