Problem 3-2

PreparingAdjusting Entries

On November 30, the end of the current fiscal year, the following information is available to assist Allerton Corporation's accountants in making adjusting entries:

1. Allertons Supplies account shows a beginning balance of $2,350. Purchases during the year were $4,218. The end-of-year inventory reveals supplies on hand of $1,397.
2. The Prepaid Insurance account shows the following on November 30:
3. Beginning balance$4,720July 14,200October 17,272
4. The beginning balance represents the unexpired portion of a one-year policy purchased in September of the previous year. The July 1 entry represents a new one-year policy, and the October 1 entry represents additional coverage in the form of a three-year policy.
5. The following table contains the cost and annualdepreciationfor buildings and equipment, all of which Allerton purchased before the current year:
6. AccountCostAnnual DepreciationBuildings$298,000$16,000Equipment374,00040,000
7. On October 1, the company completed negotiations with a client and accepted an advance of $18,600 for services to be performed monthly for a year. The $18,600 was credited to Unearned ServicesRevenue.
8. The company calculated that, as of November 30, it had earned $7,000 on an $11,000 contract that would be completed and billed in January.
9. Among the liabilities of the company is a note payable in the amount of $300,000. On November 30, the accrued interest on this note amounted to $18,000.
10. On Saturday, December 2, the company, which is on a six-day workweek, will pay its regular employees their weekly wages of $15,000.
11. On November 29, the company completed negotiations and signed a contract to provide services to a new client at an annual rate of $23,000.
12. Management estimates income taxes for the year to be $22,000.

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1.Prepare adjusting entries for each item listed above. If no entry is required, select "No entry required" and leave the amount boxes blank. For a compound transaction, if an amount box does not require an entry, leave it blank.

a. Nov. 30

To record supplies used

b. Nov. 30

To record expired insurance

c. Nov. 30

To record annual depreciation

d. Nov. 30

To record service revenue earned on services collected in advance

e. Nov. 30

To record service revenue earned on a contract to be billed in January

f. Nov. 30

To record accrued interest on note payable

g. Nov. 30

To record accrued wages

h. Nov. 30

i. Nov. 30

To record estimated income taxes

a. b. Problem 3-2 Preparing Adjusting Entries On November 30, the end of the current fiscal year, the following information is available to assist Allerton Corporation's accountants in making adjusting entries: Allerton's Supplies account shows a beginning balance of $2,350. Purchases during the year were $4,218. The end-of-year inventory reveals supplies on hand of $1,397. The Prepaid Insurance account shows the following on November 30: Beginning balance $4,720 July 1 4,200 October 1 7,272 c. d. e. f. g. h. i. j. The beginning balance represents the unexpired portion of a one-year policy purchased in September of the previous year. The July 1 entry represents a new one-year policy, and the October 1 entry represents additional coverage in the form of a three-year policy. The following table contains the cost and annual depreciation for buildings and equipment, all of which Allerton purchased before the current year: Account Cost Annual Depreciation Buildings $298,000 $16,000 Equipment 374,000 40,000 On October 1, the company completed negotiations with a client and accepted an advance of $18,600 for services to be performed monthly for a year. The $18,600 was credited to Unearned Services Revenue. The company calculated that, as of November 30, it had earned $7,000 on an $11,000 contract that would be completed and billed in January. Among the liabilities of the company is a note payable in the amount of $300,000. On November 30, the accrued interest on this note amounted to $18,000. On Saturday, December 2, the company, which is on a six-day workweek, will pay its regular employees their weekly wages of $15,000. On November 29, the company completed negotiations and signed a contract to provide services to a new client at an annual rate of $23,000. Management estimates income taxes for the year to be $22,000. Hide 1. Prepare adjusting entries for each item listed above. If no entry is required, select "No entry required" and leave the require an entry, leave it blank. a. No v. 30 To record supplies used b. No v. 30 To record expired insurance c. No v. 30 To record annual depreciation d. No v. 30 To record service revenue earned on services collected in advance e. No v. 30 To record service revenue earned on a contract to be billed in January f. No v. 30 To record accrued interest on note payable g. No v. 30 To record accrued wages h. No v. 30 i. No v. 30 To record estimated income taxes