A company has a fiscal year-end of December 31: (1) on October 1, $20,000 was paid for a one-year fire insurance policy; (2) on June 30 the company advanced its chief financial officer $18,000; principal and interest at 8% on the note are due in one year; and (3) equipment costing $68,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $13,600 per year.

Prepare the necessary adjusting entries at December 31 for each of the above items. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Transactions:

1.      On October 1, $20,000 was paid for a one-year fire insurance policy.

2.      On June 30 the company lent its chief financial officer $18,000; principal and interest at 8% are due in one year.

3.      Equipment costing $68,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $13,600 per year.

Answer rating: 100% (QA)

To prepare the necessary adjusting entries at December 31 for each of the provided ... View the full answer