Reference no: EM132472346

John's accountant is inexperienced, and he would like your help in preparing the company's year end January 31, 2008 financial statements. John makes adjusting entries only at year end.

Question 1: Prepare the adjusting journal entries required at January 31, 2008 based on the following information:

Point 1. A one-year insurance policy costing $3,600 was purchased on January 1, 2008. At that time the full amount was debited to prepaid insurance.

Point 2. A physical inventory count on January 31, 2008 revealed $800 in supplies were still remaining.

Point 3. Land and building were purchased on February 1, 2007 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.

Point 4. Unearned service revenue related to a client retainer paid on January 15, 2008. On January 31, 2008, one-quarter of this amount has been earned.

                                            Debit               Credit
Prepaid insurance                   $ 3,600
Supplies                                  1,800
Building                                100,000
Land                                    60,000
Notes payable                                            $90,000
Unearned service revenue                               8,000