Question - In each of the following independent situations, record the adjusting journal entry required at December 31, 2016 for The Prestige Corporation. No financial statements were prepared during the year and no adjusting entries were recorded.
a. In July, the company purchased supplies for $4,500. This July entry was recorded as a debit to supplies expenses. Assume the amount of supplies on hand at the end of the year totaled $1,829.
b. On September 1, 2016, The Prestige Corporation received an advance payment of $135,000 for services to be performed. The total amount received was credited to the revenue account. At December 31st, it was estimated that 28% of the services had been performed.
c. The Prestige Corporation pays weekly salaries of $23,400 on Friday for a five-day workweek ending on that day. December 31st is on Wednesday.
d. On June 1, 2016, The Prestige Corporation borrowed $36,000 from the bank on a 9-month loan. The annual interest rate is 10%.
e. The Prestige Corporation purchased a 2-year fire insurance policy on August 1, 2016, for $12,000 and debited the policy to prepaid insurance.
f. On October 1, 2016, The Prestige Corporation paid $58,000 for the annual rent on a warehouse. The rent expense account was debited when the cash was paid.
A new piece of equipment costing $33,000 was purchased April 1, 2016. The Prestige Corporation expects the equipment to have a useful life of 6 years and to have no residual value at the end of that time. The company uses the straight-line method for calculating depreciation.