Grasshopper Lawn Service provides general lawn maintenance to clients. The company's fiscal year close is December 31. The information needed
Grasshopper Lawn Service provides general lawn maintenance to clients. The company's fiscal year close is December 31. The information needed to prepare the year-end adjusting entries is shown below.
On October 1, 2021, Grasshopper lent $110,000 to another company. A note with capital and 8% interest to be paid on September 30, 2022 was signed.
On November 1, 2021, the business paid its landlord $22,500 representing rent for the months of November through January. The prepaid rent was debited for the full amount.
On August 1, 2021, Grasshopper collected $27,000 in advance rent from another company that is leasing a portion of Grasshopper's building. The $27,000 represents one year's rent and the entire amount was credited to Deferred Revenue.
Depreciation for the year is $23,000.
Vacation pay for the year that employees had earned but were not paid or recorded is $13,000. The company records vacation pay as Salary Expense.
Grasshopper started the year with $27,000 in his Supplies account. During the year $67,000 in supplies were purchased and debited to the Supplies account. At the end of the year, $27,000 worth of supplies remain on hand.
Required: Prepare the necessary adjusting entries on December 31, 2021.