Concept explainers
Videos
Problem 3-2B Preparing adjusting and subsequent
Natsu Company's annual accounting period ends on October 31. 2019. The following information concerns the
a. The Office Supplies account started the fiscal year with a S600 balance. During the fiscal year, the company purchased supplies for S4,570, which was added to the Office Supplies account. The supplies available at October 31, 2019, totaled S800. Page 120
b. An analysis of the company's insurance policies provided the following facts. The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Tear-end adjusting entries for Prepaid Insurance were properly recorded in all prior Escal years.)
Policy Date of Purchase Months of Coverage Cost
A...... April 1.201E 2A $6,000
B...... April 1.2019 36 7,200
C...... August 1.2019 12 1,320
C. The company has four employees, who earn a total of SI,000 for each workday. They are paid each Monday for their work in the five-day
workweek ending on the previous Friday. Assume that October 31. 2019, is a Monday, and all four employees worked the first day of that week. They will be paid salaries for five full days on Monday. November 7. 2019.
d. The company purchased a building on November 1, 2016, that cost S175,000 and is expected to have a S40,000 salvage value at the end of its predicted 25-year life. Annual depreciation is S5,400.
e. Because the company does not occupy the entire building it owns, it rented space to atenant at SI,000 per month, starling on September 1, 2019. The rent was paid on time on September 1. and the amount received was credited to the Rent Earned account. However, the October rent has not been paid. The company has worked out an agreement with the tenant, who has promised to pay both October and November rent in full on November 15. The tenant has agreed not to fall behind again.
f. On September 1, the company rented space to another tenant for S725 per month. The tenant paid five months' rent in advance on that date. The payment was recorded with a credit to the Unearned Rent account.
Required
Check (1b) Dr. Insurance Expense. S4.730
(1d) Dr. Depreciation Expense. S5.400
1. Use the information to prepare adjusting entries as of October 31, 2019.
2. Prepare journal entries to record the first subsequent cash transaction in November 2019 for parts c and e.
Want to see the full answer?
Check out a sample textbook solution
Chapter 3 Solutions
FUND.ACCT.PRIN.
- Reversing Entries On December 31, 2019, Kellams Company made the following adjusting entries for its annual accounting period: Required: Prepare whatever reversing entries are appropriate.arrow_forwardACCRUED INTEREST PAYABLE The following is a list of outstanding notes payable as of December 31, 20--: REQUIRED 1. Compute the accrued interest at the end of the year. 2. Prepare the adjusting entry in the general journal.arrow_forwardUNCOLLECTIBLE ACCOUNTSALLOWANCE METHOD Lewis Warehouse used the allowance method to record the following transactions, adjusting entries, and closing entries during the year ended December 31, 20--: Selected accounts and beginning balances on January 1, 20--, are as follows: REQUIRED 1. Open the three selected general ledger accounts. 2. Enter the transactions and the adjusting and closing entries in a general journal (page 6). After each entry, post to the appropriate selected accounts. 3. Determine the net realizable value as of December 31, 20--.arrow_forward
- Comprehensive Selected transactions of Shadrach Computer Corporation during November and December of 2019 are as follows: Required: Prepare journal entries to record the preceding transactions of Shadrach Computer Corporation for 2019. Include year-end accruals. Round all calculations to the nearest dollar.arrow_forwardUNCOLLECTIBLE ACCOUNTSALLOWANCE METHOD Pyle Nurseries used the allowance method to record the following transactions, adjusting entries, and closing entries during the year ended December 31, 20--. REQUIRED 1. Open the three selected general ledger accounts. 2. Enter the transactions and the adjusting and closing entries in a general journal (page 6). After each entry, post to the appropriate selected accounts. 3. Determine the net realizable value as of December 31.arrow_forwardACCRUED INTEREST RECEIVABLE The following is a list of outstanding notes receivable as of December 31, 20--: REQUIRED 1. Compute the accrued interest at the end of the year. 2. Prepare the adjusting entry in the general journal.arrow_forward
- Analyzing Accounts Receivable Upham Companys June 30, 2019, balance sheet included the following information: Required: 1. Prepare the journal entries necessary for Upham to record the preceding transactions. 2. Prepare an analysis and schedule that shows the amounts of the accounts receivable, allowance for doubtful accounts, notes receivable, and notes receivable dishonored accounts that will be disclosed on Uphams June 30, 2020, balance sheet.arrow_forwardRefer to RE6-8. On April 23, 2020, McKinncy Co. receives a check, from Mangold Corporation for 8,500. Prepare the journal entry for McKinncy to record the collection of the account previously written off.arrow_forwardThe following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 2019: Instructions 1. Prepare a multiple-step income statement. 2. Prepare a statement of owners equity. 3. Prepare a balance sheet, assuming that the current portion of the note payable is 50,000. 4. Briefly explain how multiple-step and single-step income statements differ.arrow_forward
- Trade Note Transactions Adjusto Corporation (which is on a December 31 fiscal year-end) engaged in the following transactions during 2019 and 2020: Required: Prepare journal entries to record the preceding transactions on Adjustos books, including the adjusting entries at the end of 2019. Assume a 360-day year.arrow_forwardAssume the following data for Lusk Inc. before its year-end adjustments: Journalize the adjusting entries for the following: a. Estimated customer allowances b. Estimated customer returnsarrow_forwardJournalize the adjusting entry for each of the following accrued expenses at the end of the current year:a. Product warranty cost, $26,800.b. Interest on the 19 remaining notes owed to Gallardo Co.arrow_forward
Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning