Adjusting Journal Entries
In its first year of operations, Lien Corporation entered into the following transactions, among others:
1. January 1: Bought equipment, $105,000.
2. March 31: Prepaid one year's rent, $24,000.
3. July 1: Took out a one year loan from the bank at an annual interest rate of 8%, $20,000.
4. August 1: Received payment for services not yet rendered, $12,000.
Required:
Prepare journal entries for transactions 1-4.
On December 31, Lien has earned $8,000 of the $12,000 in transaction 4 and has incurred but not recorded $450 of utilities. Lien prepares adjusting entries on an annual basis.
Prepare any adjusting journal entries needed at December 31. Assume that the equipment depreciates $15,000 annually.
Adjusting Journal Entries
Mikato Company's annual accounting period ends on June 30, 2012. Mikato makes adjusting journal entries semiannually, and the following information applies to all necessary adjusting journal entries at June 30, 2012:
1. Mikato carries the following two insurance policies:
| |
Purchase
|
Policy
|
Cost at
|
|
Policy
|
Date
|
Length
|
Purchase Date
|
|
A
|
July 1, 2010
|
5 years
|
$48,000
|
|
B
|
July 1, 2011
|
2 years
|
16,000
|
2. At January 1, 2012, office supplies totaled $1,800. In the past six months, additional supplies of $2,700 were purchased, and a count revealed $2,150 available supplies at June 30, 2012.
3. Mikato owns one building:
Cost Useful Life Annual Depreciation
$150,000 25 56,000
4. Mikato decides to rent out a portion of its building. On June 1, 2012, Mikato received a prepayment of $5,700 for rent for the months of June, July, and August.
5. The Mikato staff consists of seven employees. Each employee earns a total of $1,200 a week and is paid each Monday for the previous week's work. June 30, 2012, falls on Thursday.
Required:
Prepare all necessary adjusting entries at June 30, 2012.
Indicate whether each entry relates to a deferred revenue, deferred expense, accrued revenue, or accrued expense.
Adjusting Entries and Trial Balance
The unadjusted trial balance of Sweet Cheeks Facial Spa is shown as follows:
|
Sweet Cheeks Facial Spa
Unadjusted Trial Balance
September 30
|
|
|
|
|
Debit
|
Credit
|
|
Cash
|
S 4,300
|
|
|
Supplies
|
2,250
|
|
|
Equipment
|
18,000
|
|
|
Accumulated Depreciation
|
|
S 2,400
|
|
Unearned Revenue
|
|
1,500
|
|
Notes Payable
|
|
10,000
|
|
Common Stock
|
|
10,000
|
|
Service Revenue
|
|
4,000
|
|
Advertising Expense
|
650
|
|
|
Depreciation Expense
|
1,200
|
|
|
Interest Expense
|
400
|
|
|
Salaries Expense
|
600
|
|
|
Dividends
|
500
|
|
|
Totals
|
$27,900
|
$27,900
|
Additional Information:
1. On September 30, Sweet Cheeks completed a service for which it had received payment in August, $1,500.
2. On September 30, Sweet Cheeks determined that it had earned but not yet billed revenues of $500.
3. Monthly depreciation on Sweet Cheeks' equipment is $150.
4. The interest rate on the promissory note is 6%.
5. A count of the supplies revealed $500 of supplies remaining on September 30.
Required:
Prepare all necessary adjusting entries for the month of September.
Assume the trial balance was last adjusted on August 31. Prepare an adjusted trial balance as of September 30. List the accounts in chart of acconts order.