Prepare adjusting journal entries at year-end

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Reference no: EM131811968

Selected accounts from Second City Company's trial balance of 12/31/17 appear below:

Accounts Payable $200,000

Accounts Receivable $350,000

Accumulated Depreciation-Equipment $200,000

Allowance for doubtful Accounts $20,000

Common Stock $60,000

Insurance Expense $30,000

Interest Expense $10,000

Merchandise Inventory, Specific Identification $300,000

Note Payable, 12% interest payable annually on 11/30 Issued 12/1/2017, due 12/1/2022   $600,000

Office Supplies Expense $15,000

Rent Expense $180,000

Retained Earnings (Balance 1/1/17) $130,000

Revenue (Sales) $3,000,000

Salaries Expense $328,000

Required:

Prepare adjusting journal entries at year-end, December 31, 2017, based on the following information. No adjusting or closing journal entries have been made during the year. Create any accounts that you need that are not listed above.

A) The equipment has a life of 4 years, $200,000 salvage value, and the straight-line method of depreciation is used.

B) Record interest on the note payable.

C) Salaries and wages earned but unpaid at 12/31/17, $20,000.

D) Office Supplies Expense includes $4,000 of unused office supplies on 12/31/17.

E) The Rent Expense of $180,000 covered a prepayment for six months, from October 1, 2017 through March 31, 2018. It was paid on October 1, 2017.

Reference no: EM131811968

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