The following information is from the trial balance of the Basil Herb Company.
Accounts Payable $ 234,000
Accounts Receivable 164,000
Accumulated Depreciation—Equipment 225,000
Allowance for Doubtful Accounts 16,500
Bonds Payable 1,000,000
Cash 325,000
Common Stock 60,000
Discount on Bonds Payable 17,100
Equipment 950,000
Insurance Expense 30,000
Interest Expense 16,900
Inventory 300,000
Notes Payable (due 6/1/15) 200,000
Prepaid Rent 90,000
Retained Earnings 824,000
Salaries and Wages Expense 178,000
Salaries and Wages Payable 17,600
Unearned Revenue 15,000
(All of the above accounts have their normal debit or credit balances.)
Required: Prepare adjusting journal entries at year end, December 31, 2014, for the Basil Herb Company using the following supplemental information.
a. Unexpired insurance at 12/31/14 is $22,500.
b. The equipment has a useful life of 15 years with 10,000 salvage value. (Straight-line method being used.)
c. Interest accrued on the bonds payable is $16,000 as of 12/31/14. The discount is straight line amortized over the course of the bonds. Bonds were issued January 1, 2014 for $318,000 due in 10 years paying interest semiannually on July 1, and Jan. 1.
d. The unearned revenue of 15,000 was received June 1, 2014 to be earned evenly over the course of the year.
e. The rent payment of $90,000 covered the six months from November 30, 2014 through May 31, 2015.
f. Salaries and wages earned but unpaid at 12/31/12, $42,600.