Recording Adjusting Entries (Accrued Accounts) In each of the following transactions ( a ) through ( c ) for Romney’s Marketing Company, use the threestep process illustrated in the chapter to record the adjusting entry at year-end December 31, 2012. The process includes (1) determining if revenue was earned or an expense incurred, (2) determining whether cash was received or paid in the past or will be received or paid in the future, and (3) computing the amount of the adjustment. a. Estimated electricity usage at $380 for December; to be paid in January 2013. b. On September 1, 2012, loaned $5,000 to an officer who will repay the loan principal and interest in one year at an annual interest rate of 14 percent. c. Owed wages to 10 employees who worked four days at $150 each per day at the end of December. The company will pay employees at the end of the first week of January 2013.

Adjusting Entries The bookkeeper for Joe’s Hardware Co. records all revenue and expense items in nominal accounts during the period. The following balances, among others, are listed on the trial balance at the end of the fiscal period, December 31, 2013, before accounts have been adjusted: Dr. (Cr.) Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $123,000 Allowance for Bad Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,700) Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200 Discount on Notes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300 Prepaid Real Estate and Personal Property Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .…

The following partial work sheet covers the affairs of Masanto and Company for the year ended June 30.  Required: 1. Journalize the six adjusting entries. 2. Journalize the closing entries.  3. Journalize the reversing entry as of July 1, for the salaries that were accured in the June adjusting entry.

Which of the following is the proper adjusting entry, based on a prepaid insurance account balance before adjustment of $14,337 and unexpired insurance of $5,149, for the fiscal year ending on April 30? a.) debit Prepaid Insurance, $9,188; credit Insurance Expense, $9,188 b.) debit Prepaid Insurance, $14,337; credit Insurance Expense, $14,337 c.) debit Insurance Expense, $9,188; credit Prepaid Insurance, $9,188 d.) debit Insurance Expense, $14,337; credit Prepaid Insurance, $14,337