The following are several transactions of Ardery Company that occurred during the current year and were recorded in permanent (that is, balance sheet) accounts unless indicated otherwise. Date Transaction Apr. 1 Purchased a delivery van for $20,000, paying $1,000 down, and issuing a 1-year, 6% note payable for the $19,000 balance. It is estimated that the van has a 4-year life and an $800 residual value; the company uses straight-line depreciation. The interest on the note will be paid on the maturity date. May 15 Purchased $800 of office supplies. June 2 Purchased a 2-year comprehensive insurance policy for $720. Aug. 1 Received 6 months' rent in advance at $300 per month and recorded the $1,800 receipt as Rent Revenue. Sept. 15 Advanced $600 to sales personnel to cover their future travel costs. Nov. 1 Accepted a $4,000, 6-month, 6% (annual rate) note receivable from a customer, the interest to be collected when the note is collected. The following information also is available: 1. On January 1, the Office Supplies account had a $250 balance. On December 31, an inventory count showed $180 of office supplies on hand. 2. The weekly (5-day) payroll of Ardery Company amounts to $2,000. All employees are paid at the close of business each Wednesday. A 2-day accrual is required for the current year. 3. Sales personnel travel cost reports indicate that $450 of advances had been used to pay travel expenses. 4. The income tax rate is 30% on current income and is payable in the first quarter of next year. The pretax income before the adjusting entries is $8,655. Required: On the basis of the above information, prepare journal entries to record whatever adjustments are necessary to bring the accounts up to date on December 31.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following are several transactions of Ardery Company that occurred during the current year and were recorded in permanent (that is, balance sheet) accounts unless indicated otherwise. Date Transaction Apr. 1 Purchased a delivery van for $20,000, paying $1,000 down, and issuing a 1-year, 6% note payable for the $19,000 balance. It is estimated that the van has a 4-year life and an $800 residual value; the company uses straight-line depreciation. The interest on the note will be paid on the maturity date. May 15 Purchased $800 of office supplies. June 2 Purchased a 2-year comprehensive insurance policy for $720. Aug. 1 Received 6 months' rent in advance at $300 per month and recorded the $1,800 receipt as Rent Revenue. Sept. 15 Advanced $600 to sales personnel to cover their future travel costs. Nov. 1 Accepted a $4,000, 6-month, 6% (annual rate) note receivable from a customer, the interest to be collected when the note is collected. The following information also is available: 1. On January 1, the Office Supplies account had a $250 balance. On December 31, an inventory count showed $180 of office supplies on hand. 2. The weekly (5-day) payroll of Ardery Company amounts to $2,000. All employees are paid at the close of business each Wednesday. A 2-day accrual is required for the current year. 3. Sales personnel travel cost reports indicate that $450 of advances had been used to pay travel expenses. 4. The income tax rate is 30% on current income and is payable in the first quarter of next year. The pretax income before the adjusting entries is $8,655. Required: On the basis of the above information, prepare journal entries to record whatever adjustments are necessary to bring the accounts up to date on December 31.

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