Fabulous Corporation adjusts its accounts at the end of each month. The following information has been...

 

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Fabulous Corporation adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at 31 January 2021: (1) On 1 January 2021, the company paid €18,240 in advance for office rent till 30 June 2021 and recorded this amount on Prepaid Rent account. (2) The useful life of the building was estimated to be 20 years. It was purchased three years ago for €201,600. (3) On January 1, 2021 the company borrowed €12,000 by signing a 6-month, 8% note payable. The entire note, plus 6 months' accrued interest, is due on July 1, 2021. No record has yet been made to accrue interest on this note for January. (4) Salaries earned by employees, but not recorded or paid as of 31 January, amount to €2,040. (5) Income taxes expense for January is estimated at €5,040. This amount will be paid on February 15. Instructions: Explain the purpose of adjusting entries. (5 points) Record the adjusting entries required at 31 January 2021 in General Journal provided. (25 points) Account Titles and Explanation Debit Credit Date Fabulous Corporation adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at 31 January 2021: (1) On 1 January 2021, the company paid €18,240 in advance for office rent till 30 June 2021 and recorded this amount on Prepaid Rent account. (2) The useful life of the building was estimated to be 20 years. It was purchased three years ago for €201,600. (3) On January 1, 2021 the company borrowed €12,000 by signing a 6-month, 8% note payable. The entire note, plus 6 months' accrued interest, is due on July 1, 2021. No record has yet been made to accrue interest on this note for January. (4) Salaries earned by employees, but not recorded or paid as of 31 January, amount to €2,040. (5) Income taxes expense for January is estimated at €5,040. This amount will be paid on February 15. Instructions: Explain the purpose of adjusting entries. (5 points) Record the adjusting entries required at 31 January 2021 in General Journal provided. (25 points) Account Titles and Explanation Debit Credit Date

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