Preparing adjusting journal entries Arnez Co. records prepaid expenses in balance sheet accounts. Arnezs annual accounting period
Question:
Preparing adjusting journal entries Arnez Co. records prepaid expenses in balance sheet accounts. Arnez’s annual accounting period ends on December 31, 2008. The following information concerns the adjusting entries to be recorded as o that date.
a. The Office Supplies account started the year with a \($4,000\) balance. During 2008, the company purchased supplies for \($13,400\), which was added to the Office Supplies account. The inventory of supplies available at December 31, 2008, totaled \($2,554.\)
An analysis of the company’s insurance policies provided the following facts.
b. The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years.)
c. The company has 15 employees, who earn a total of \($1,960\) in salaries each working day. They are paid each Monday for their work in the five-day workweek ending on the previous Friday. Assume that December 31, 2008, is a Tuesday, and all 15 employees worked the first two days of that week. Because New Year’s Day is a paid holiday, they will be paid salaries for five full days on Monday, January 6, 2009.
d. The company purchased a building on January 1, 2008. It cost \($960,000\) and is expected to have a \($45,000\) salvage value at the end of its predicted 30-year life. Annual depreciation is \($30,500.\)
Required Use the information to prepare adjusting entries as of December 31, 2008.
Step by Step Answer:
College Accounting Ch 1-14
ISBN: 9780073346892
1st Edition
Authors: John Wild, Vernon Richardson, Ken Shaw