Prepare the Adjusting Journal Entries
The ledger of Casper Consulting at January 31, 2011 includes the following selected accounts:
Casper's accountant is inexperienced, and he would like your help in preparing the company's yearend January 31, 2011 financial statements. Casper makes adjusting entries only at year end. The accountant has provided you with the following information:
1. A one-year insurance policy costing $3,600 was purchased on January 1, 2011. At that time the full amount was debited to prepaid insurance.
2. A physical inventory count on January 31, 2011 revealed $800 in supplies were still remaining.
3. Land and building were purchased on February 1, 2010 at a cost of $160,000. The building has an expected useful life of 20 years. The purchase was financed by paying $70,000 in cash and the balance on a 2-year, 8% note payable. Interest on the note is due at maturity.
4. Unearned service revenue related to a client retainer paid on January 15, 2011. On January 31, 2011, one- quarter of this amount has been earned.
Prepare the adjusting journal entries required at January 31, 2011.