Reference no: EM131753348

Determining Adjusting Entries and Tracing Their Effects to Financial Statements

Kitz Limo Service, Inc., was organized to provide limousine service between the airport and various suburban locations. It has just completed its second year of business. Its trial balance follows.

The following information is also available:

1. To obtain space at the airport, Kitz paid two years' rent in advance when it began the business.
2. An examination of insurance policies reveals that $2,800 expired during the year.
3. To provide regular maintenance for the vehicles, Kitz deposited $12,000 with a local garage. An examination of maintenance invoices reveals charges of $10,944 against the deposit.
4. An inventory of spare parts shows $1,902 on hand.
5. Kitz depreciates all of its limousines at the rate of 12.5 percent per year. No limousines were purchased during the year.
6. A payment of $1,500 for one full year's interest on notes payable is now due.
7. Unearned Passenger Service Revenue on June 30 includes $17,815 for tickets that employers purchased for use by their executives but which have not yet been redeemed.
8. Federal income taxes for the year are estimated to be $13,250.

1.  Determine adjusting entries and enter them in the general journal (Page 14). Enter the adjusting entries in the order shown above (a through h) in the additional information section. Include the Post. Ref. column and fill in using the account numbers listed in the question.