The information necessary for preparing the 2018 year-end adjusting entries for Gamecock Advertising Agency appears below. Gamecock’s fiscal year-end is December 31.

a. On July 1, 2018, Gamecock receives $5,700 from a customer for advertising services to be given evenly over the next 10 months. Gamecock credits Deferred Revenue.

At the beginning of the year, Gamecocks depreciable equipment has a cost of $33,000, a five year life, and no salvage value The equipment is depreciated evenly (straight-line-depreciation method) over the five years\\\\

c. On May 1, 2018, the company pays $4,440 for a two-year fire and liability insurance policy and debits Prepaid Insurance.

d. On September 1, 2018, the company borrows $17,000 from a local bank and signs a note. Principal and interest at 9% will be paid on August 31, 2019.

e. At year-end there is a $2,550 debit balance in the Supplies (asset) account. Only $970 of supplies remains on hand.

Required:

Record the adjusting entry for depreciation at its yearend of December 31\\\\, 2018. No prior adjustments have been made during 2018.

Answer rating: 100% (QA)

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