Adjusting entries, Financial Accounting

Assignment Help:

Adjusting Entries Clapton Guitar Company entered into the following transactions during 2013. [The transactions were properly recorded in permanent (balance sheet) accounts unless otherwise indicated.]
Date Transaction Jan. 25 Purchased $480 of of?ce supplies.
Feb. 1 Rented a warehouse from Hendrix Company, paying 1 year's rent of $3,600 in advance. Recorded the $3,600 payment as rent expense.
Mar. 1 Borrowed $10,000 from the bank, signing a 1-year note at an annual interest rate of 12%. The bank insisted on collecting the interest in advance, so it withheld the interest amount from the funds disbursed to Clapton. The company recorded the transaction as a debit to Cash, $8,800, a debit to Interest Expense, $1,200, and a credit to Notes Payable, $10,000.
May 1 Purchased of?ce equipment for $15,000, paying $3,000 down and signing a 2-year, 12% (annual rate) note payable for the balance. The of?ce equipment is expected to have a useful life of 10 years and a residual value of $1,500. Straight-line depreciation is appropriate.
May 31 Purchased a 3-year comprehensive insurance policy for $720.
Aug. 1 Sold land for $9,000. The purchaser made a $2,000 down payment and signed a 1-year, 10% note for the balance. The interest and principal will be collected on the maturity date.
Oct. 1 Rented a portion of the retail ?oor space to Harrison Inc. for $120 per month, collecting 8 months' rent in advance. Recorded the $960 receipt as rent revenue.
Nov. 13 Issued checks to sales personnel totaling $900. The checks are advances for expected travel costs during the remainder of the year.On December 31, 2013, the following additional information is available:
1. Property taxes for 2013 are due to be paid by April 1, 2014. The company has not paid or recorded its $2,300 property taxes for 2013.
2. The $302 December utility bill has not been recorded or paid.
3. Salaries accrued but not paid total $927.
4. Travel cost reports indicate that $787 of the $900 advanced has been used to pay for travel expenses by com-pany personnel.
5. The Of?ce Supplies account had a balance of $129 on January 1, 2013. A physical count on December 31, 2013, showed $174 of of?ce supplies on hand.
6. On January 1, 2013, the Buildings account and the Store Equipment account had balances of $100,000 and $65,000, respectively. The buildings are expected to have a 20-year useful life and an $8,000 residual value, while the store equipment is expected to have a 10-year life and a $2,000 residual value. They are being depre-ciated using the straight-line method.
7. The income tax rate is 30% on current income and is payable in the ?rst quarter of 2014. The pretax income of the company before adjustments is $27,749.
Required: On the basis of the preceding information, prepare journal entries to adjust Clapton's books as of December 31, 2013. Each entry explanation should include supporting computations. (Round to the nearest dollar.)


Related Discussions:- Adjusting entries

Working Capital movement, If revenue=£92 million, purchase costs=£48 millio...

If revenue=£92 million, purchase costs=£48 million and operating costs=£41 million, and if working capital days are 39 for inventory and 110 for accounts payable, what is the worki

State the users of accounting information, State the users of accounting in...

State the users of accounting information Environment has brought new challenges for managers and other users of accounting information. Their requirements have changed and bot

Lease or buy, La Favorite Pastry Shop has been in business since 1985 and s...

La Favorite Pastry Shop has been in business since 1985 and started with a large commercial oven that was built in 1955. Max, the owner is debating whether or not to purchase a new

Mortgage, Ask questiJohn’s away at the moment, and his email provider has a...

Ask questiJohn’s away at the moment, and his email provider has a size limit on the data that can be sent via email. What is a potential solution for John, and name a provider that

Prepare the appropriate entry, LCI Cable Company grants 1.4 million perform...

LCI Cable Company grants 1.4 million performance stock options to key executives at January 1, 2013. The options entitle executives to receive 1.4 million of LCI $1 par common shar

Equity shareholders, Equity shareholders, potential and present, seem prima...

Equity shareholders, potential and present, seem primarily to the company's record of earnings. They are thus interested in relationships as earnings per share or EPS and dividends

Admission of a new partner, Admission of a new partner When a new partn...

Admission of a new partner When a new partner joins the firm/partnership, the new partner will enjoy the benefits arising as a result of goodwill created by the old existing pa

Creation-express trusts-trust laws and accounts, Creation An express tr...

Creation An express trust is "created not by facts and circumstances, but by the express words of the settlor". (Fitzgerald v Stewart) It may be created in the following ways:

Example on financial and managerial accounting, Mr N. M. is lucky to have a...

Mr N. M. is lucky to have a lottery prize of Rs 20 million. He does not have any liability and does not have any claimant over this money. He has the following alternatives: (i)

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd