Reference no: EM132574698

Question - Prepare the necessary adjusting entries at December 31, 20X1 for the Huntington Company for each of the following situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. Show your calculations for partial credit.

For each entry, identify whether the adjusting entry is an accrual or a deferral.

1. On July 1, 20X1, Huntington borrowed $100,000 from a bank. A note payable was signed with principal and 6% interest to be paid on July 1, 20X2.

2. Equipment costing $60,000 had been purchased on October 1, 20X1. It has an 8 year life and a residual value of $4,000. Use the straight-line method of depreciation.

3. Salaries of $40,000 were unpaid and unrecorded as of December 31, 20X1.

4. Huntington began the year with $4,000 in its asset account, supplies. During the year, $5,000 in supplies were purchased and debited to supplies. At year end, a physical count was taken and supplies costing $3,000 remain on hand.

5. On Dec. 1, 20X1, Huntington collected $36,000 rent in advance from another company that is renting a part of Huntington's factory. The $36,000 represents one year's rent and the entire amount was originally credited to Unearned Rent Revenue.