Reference no: EM131219253

The following information is from the trial balance of the Basil Herb Company.

Accounts Payable $ 234,000

Accounts Receivable 164,000

Accumulated Depreciation—Equipment 225,000

Allowance for Doubtful Accounts 16,500

Bonds Payable 1,000,000

Cash 325,000

Common Stock 60,000

Discount on Bonds Payable 17,100

Equipment 950,000

Insurance Expense 30,000

Interest Expense 16,900

Inventory 300,000

Notes Payable (due 6/1/15) 200,000

Prepaid Rent 90,000

Retained Earnings 824,000

Salaries and Wages Expense 178,000

Salaries and Wages Payable 17,600

Unearned Revenue 15,000

(All of the above accounts have their normal debit or credit balances.)

Required: Prepare adjusting journal entries at year end, December 31, 2014, for the Basil Herb Company using the following supplemental information.

a. Unexpired insurance at 12/31/14 is $22,500.

b. The equipment has a useful life of 15 years with 10,000 salvage value. (Straight-line method being used.)

c. Interest accrued on the bonds payable is $16,000 as of 12/31/14. The discount is straight line amortized over the course of the bonds. Bonds were issued January 1, 2014 for $318,000 due in 10 years paying interest semiannually on July 1, and Jan. 1.

d. The unearned revenue of 15,000 was received June 1, 2014 to be earned evenly over the course of the year.

e. The rent payment of $90,000 covered the six months from November 30, 2014 through May 31, 2015.

f. Salaries and wages earned but unpaid at 12/31/12, $42,600.