Assignment 2

#3 (7 marks 14 minutes) (V1) Freds Security has the following transactions and items requiring December 31, 2017 adjustments. Prepare journal entries as necessary.

a.) i.) The company purchased a 12-month insurance policy for $2,000 cash on March 1, 2017.

ii.) A December 31 adjustment is required.

b.) i.) The company entered into a contract to provide security work for a client. The client paid Freds security $10,000 on October 1, 2017. The company was required to provide security service for 12 months, from October 1, 2017 November 30, 2018.

ii.) A December 31 adjustment is required (assume the company provided security service as promised up to December 31).

c.) The company pays salaries of $8,000 every week on Sunday, based on a 7-day workweek. Assume salaries are earned at the same rate each day. This year, December 31 falls on a Thursday. Record the necessary adjustment.

d.) i.) The company purchased a car for $15,000 cash on February 1, 2017. The car is expected to have a 10-year useful life and no residual value. The companys accountant wishes to use straight line depreciation.

ii.) A December 31 adjustment is required.

#4 (3 marks 6 minutes)

The July 31, 2018 adjusted trial balance of Anderson Company is found below:

Cash	$ 1,000
Accounts receivable	1,500
Supplies	500
Notes receivable	600
Equipment	32,000
Accumulated depreciation, equipment		$ 14,000
Land	58,000
Accounts payable		500
Notes payable		1,000
Mortgage payable		30,000
Common shares		100
Retained earnings		32,000
Dividends	2,000
Repairs revenue		55,000
Wages expense	20,000
Supplies expense	1,000
Depreciation expense	3,000
Maintenance expense	5,000
Interest expense	2,000
Income tax expense	6,000
Totals	$132,600	$132,600

Required: Prepare closing entries for the company.

#5 (4 marks 8 minutes)

Smith Inc.

Bank Reconciliation

July 31, 2017

Balance per bank		$3,359	Balance per book	$2,550
Add: deposit in transit		817	NSF cheque J Brown	(300)
Deduct: Outstanding cheques #			Collected note receivable	408*
232	$1,061		Bank fees	(18)
234	240		Bookkeeper error	(9)
195	195
49	49	(1,545)
Balance		$2,631	Balance	$ 2,631

(*) The collection included the original note of $380 and interest of $28. (**) The bookkeeper made an error recording a payment on account. They recorded the cheque, a payment on account for $1,590, the actual amount of the cheque was $1,599.

Required: Based on the completed Bank Reconciliation above, please record any required journal entries.