E3-6B (Adjusting Entries) Cheng, D.D.S., opened a dental practice on January 1, 2014. During the first month of operations the following transactions occurred.

1. Performed services for patients who had dental plan insurance. At January 31, $375 of such ser- vices was performed but not yet billed to the insurance companies.

2. Utility expenses incurred but not paid prior to January 31 totaled $260.

3. Purchased dental equipment on January 1 for $40,000, paying $10,000 in cash and signing a

$30,000, 3-year note payable. The equipment depreciates $200 per month. Interest is $250 per

month.

4. Purchased a one-year malpractice insurance policy on January 1 for $6,000.

5. Purchased $800 of dental supplies. On January 31, determined that $250 of supplies were on hand.

Instructions

Prepare the adjusting entries on January 31. Account titles are:

Accumulated DepreciationEquipment Interest Payable Depreciation Expense Prepaid Insurance Service Revenue Supplies

Accounts Receivable Supplies Expense Insurance Expense Utilities Expense Interest Expense Utilities Payable

P3-10B (Adjusting and Closing) Presented below is the December 31 trial balance of Juno Beach

6 7 Clothing, Inc.

JUNO BEACH CLOTHING, INC.

TRIAL BALANCE

DECEMBER 31

Debit Credit

Cash $ 23,850

Accounts Receivable 16,000

Allowance for Doubtful Accounts $ 600

Inventory, December 31	73,600
Prepaid Insurance	5,200
Equipment	60,000
Accumulated DepreciationEquipment			26,000
Notes Payable			21,000
Accounts Payable			18,400
Common Stock			10,000
Retained Earnings			76,550
Sales Revenue			397,300
Cost of Goods Sold	204,150
Salaries and Wages Expense (sales)	56,850
Advertising Expense	26,700
Salaries and Wages Expense (administrative)	79,300
Supplies Expense	4,200
	$549,850		$549,850

Instructions

(a) Construct T-accounts and enter the balances shown.

(b) Prepare adjusting journal entries for the following and post to the T-accounts. (Omit explana-

tions.) Open additional T-accounts as necessary. (The books are closed yearly on December 31.)

1. Bad debt expense is estimated to be $1,600.

2. Equipment is depreciated based on a 8-year life (no salvage value).

3. Insurance expired during the year $3,650.

4. Interest accrued on notes payable $2,050.

5. Sales salaries and wages earned but not paid $2,750.

6. Advertising paid in advance $1,100.

7. Office supplies on hand $900, charged to Supplies Expense when purchased.

(c) Prepare closing entries and post to the accounts.