The following information is available for M&M Johnson, Inc.:
a. The December 31, 2011, supplies inventory balance is $85,000. A count of supplies reveals that the company actually has $30,000 of supplies on hand.
b. As of December 31, 2011, Johnson, Inc. had not paid the rent for December. The monthly rent is $2,400.
c. On December 20, 2011, Johnson collected $18,000 in customer advances for the subsequent performance of a service. Johnson recorded the $18,000 as unearned revenue, and as of December 31 two-thirds of the service had been performed.
d. The total cost of Johnson’s fixed assets is $500,000. Johnson estimates that the assets have a useful life of ten years and uses the straight-line method of depreciation.
e. Johnson placed several ads in local newspapers during December. On December 31, the company received a $28,000 bill for the ads, which was not recorded at that time.
g. On July 1, 2011 Johnson paid the premium for a one-year life insurance policy. The $350 cost of the premium was capitalized when paid.
REQUIRED:
Prepare the adjusting journal entries necessary on December 31, 2011.