How To Adjust For The Year End

Transcription

1 ACCOUNTING 30S WORKSHEET ON ADJUSTING ENTRIES Put on your thinking caps and sharpen your pencils boys and girls it's time to practice with adjusting entries! 1. Give in general journal form the year-end adjusting entry for each of the following: a. The Prepaid Insurance account had a $985 debit balance at the end of the accounting period before adjustment for expired insurance. An examination of insurance policies showed that $540 of insurance had expired. IK The Prepaid Insurance account had an $890 debit balance at the end of the accounting period before adjustment for expired insurance. An examination of insurance policies showed $270 of unexpired insurance. c. The store supplies account had a $215 debit balance on January I; store supplies costing $580 were purchased during the year, and a year-end inventory showed $235 of unconsumed store supplies on hand. d. Four months' property taxes, estimated at $445, have accrued but are unpaid and unrecorded at the accounting period end. c. Depreciation on store equipment for the accounting period is estimated at 52,775. A company paid the $1,800 premium on a three-year insurance policy on August 1, a. How many dollars of the premium should appear on the 1980 income statement as an expense? b. How many dollars of the premium should appear on the December 31, 1980, balance sheet as an asset? c d. Under the assumption that the Prepaid Insurance account was debited for S 1,800 in recording the premium payment, give the December , adjusting entry to record the expired insurance. Under the assumption the bookkeeper incorrectly debited the Insurance Expense account for $1,800 in recording the premium payment glye the December 31, adjusting entry. (Hint: Did the bookkeeper s error change the answers to questions (a) and (6) of this exercise?) Determine the amounts indicated by the question marks in the columns below. The amounts in each column constitute a separate problem. Supplies purchased during the year... Supplies consumed during the year... Supplies remaining at the year-end... (a) (b) (c) id) $213 $142 $325 $? n

2 On December 31, at the end of a yearly accounting period, the following information for adjustments was available: a. The prepaid insurance account showed these amounts: Jan. I Balance May I Nov. I Prepaid Insurance The January 1 balance represents the unexpired premium on a one-year policy purchased on May 1 of the previous year. The May I debit resulted from paying the premium on a one-year policy, and the November I debit represents the cost of a three-year policy. b. The office supplies account showed these amounts: Jan. I Balance Mar. 10 Purchase Oct. 5 Purchase Office Supplies The December 31 year-end inventory of office supplies showed $95 of ^x unused supplies. Cyf The company owns and occupies a building that was completed and occupied for the first time on April 1 of the current year. The company had previously occupied rented quarters. The building cost $192,000, has an estimated 40-year useful life, and is not expected to have any salvage value at the end of its life. d. The company rents portions of the space in its building to two tenants. Tenant A agreed beginning on September 1 to rent a small amount of space at $100 per month, and on that date paid six months* rent in advance. The $600 was credited to the Unearned Rent account. e. Tenant B pays $ 150 rent per month on the space he occupies. During the months of June through November he paid his rent each month on the first day of the month, and the amounts paid were credited to Rent Earned. However, he has recently experienced financial difficulties and has not yet paid his rent for December. / The company has two office employees who earn $24 and $36 per day, respectively. They are paid each Friday for a workweek that begins on Monday. They were paid last Friday and have worked on Monday and Tuesday, December 30 and 31 of this week. Required: Prepare adjusting journal entries for each of the units of information.

3 ^d^t^tt f C h.* V r 0 n M o v i n S t o r a «««Company's ledger at the end of its annual accounting period carried these items: CHEVRON MOVING AND STORAGE COMPANY Trial Balance, December 31,19 Cash Accounts receivable. 680 Prepaid insurance 1340 Office supplies 210. Office equipment Accumulated depreciation, office equipment... $ 320 Trucks Accumulated depreciation, trucks. 2,630 Buildings. ~ 38,300 Accumulated depreciation, buildings 10,900 Land Accounts payable 875 Unearned storage fees 685 Mortgage payable 20,000 Ted Davis, capital 18*490 Ted Davis, withdrawals Revenue from moving services 42,995 Storage fees earned 2,960 Office salaries expense 5,200 Truck drivers* wages expense 18*410 Gas, oil, and repairs expeose +. 1,515 Required: $ 2A60 Totals $99,855 $ Open the accounts of the trial balance and these additional accounts: Wages Payable; Insurance Expense; Office Supplies Expense; Depreciation Expense, Office Equipment; Depreciation Expense, Trucks; and Depreciation Expense, Buildings. Enter the trial balance amounts in the accounts. 2. Use this information to prepare and post adjusting journal entries: a. An examination of insurance policies showed $915 of insurance expired. b. An office supply inventory showed $55 of unused office supplies on hand at the period end. c. Estimated depreciation of office equipment, $ 130; (d) trucks, $2,875; and (?) buildings. $2,100. /. The company crediu the storage fees of customers who pay in advance to the Unearned Storage Fees account Of the $685 credited to this account during the year. $385 had been earned by the year-end. g. Accrued storage fees earned but unrecorded in the accounts and uncollected at the year-end totaled $ 140. h. There were $285 of earned but unpaid truck drivers' wages at the yearend.

4 Prepared by Mrs. J Kroeker Accounting Systems AOS ( 1. Bobby's books had prepaid insurance at the beginning of the year in the amount of $550. At the end of the year $100 of this insurance had expired. Calculate the adjusting journal entry at the year end. 2. Mind Your Own Business rents office space in a downtown building. A cheque for $1 200 was issued to the landlord, City Realty, for three months office rent on December 1. Record the adjusting entry at December Apple's and Orange's Grocery Store advertises in the local newspaper. They pay the newspaper the total advertising amount for the whole year at the beginning of the year (January 1) in the amount of $ (therefore, this amount is for 12 months). Calculate the adjusting entry and the closing entry required after 3 months. 4. Office supplies on hand at Jane's Grocery amounted to $695 at the beginning of the year. At the end of the year, a physical inventory count was taken and it showed that office supplies on hand amounted to $470. Prepare the adjusting entry to record supplies expense required at the end of the year.

5 Prepared by Mrs. J Kroeker Accounting Systems 40S 5. The fiscal year for Montreal Distributors ends December 31. The supplies on hand at the beginning of the year amounted to $ During the year, the president decides that the company must make cutbacks. Supplies were no longer allowed to be purchased. At December 31, the supplies on hand were $ Prepare the adjusting entry. \ 6. At the beginning of their fiscal year, April 1, 2001, Ray's Piano had only $ of office supplies. Since all of their customers want to take home their new piano pencils, Ray decided to purchase 200 cases on April 4, This amounted to $ At the yearend, March 30, 2002, Ray had $5 120 of office supplies on hand. What is the necessary adjusting entry? 7. The supplies account at Murphy's Mops Cleaning Business had a balance of $700 at the beginning of the fiscal period. At the end of the fiscal period, an inventory shows supplies on hand worth $100. a) What was the value of supplies used during the fiscal period? b) What is the supplies expense for the fiscal period? c) What should the balance be in the supplies account at the end of the fiscal period?

6 Prepared by Mrs. J Kroeker Accounting Systems 40S d) Prepare the adjusting entry to record the supplies used. * 8. Charlie's Meat Market has hired you as their accountant Prepare the adjusting entries for the month of January for the following: a) Balance of supplies account on January 1: $ Supplies on hand on January 31: $250 (show your work). b) Rent was paid for three months on January 1, $2 400 (show your work) c) A 12 month insurance policy was purchased on January 15 for $1200. (show your work)