Problem - For each of the following isolated situations, prepare the appropriate adjusting entry.
a) On June 1, you bought a piece of machinery for $50,000. The estimated useful life of the machine is 8 years, with no residual value estimated at that time. It is now December 31, which is your year-end. Record the adjusting entry for depreciation for the year.
b) You sell subscriptions to your magazine, Kittens Quarterly, on a yearly basis for the fee of $24/year. Issues come out in March, June, September and December. A new customer purchases a subscription in January. It is now April 30th, which is your year-end. First, record the journal entry to record the receipt of the subscription fee in January, and then record the adjusting entry for the end of April.
c) You are a consultant, and you have provided your services to Big Al's Used Cars for the past month. Today is the end of the accounting period, but you will not be billing Big Al until next month. You have provided $2,300 worth of services. What would the adjusting entry be?
d) You pay weekly salaries to your staff and your accounting period end falls on a Wednesday. Your daily salary expense is $600. What adjusting entry must be recorded to account for the unpaid salaries?
e) You paid $5,000 for your annual property insurance policy eight months ago. It is now your year-end. What is the appropriate adjusting entry?
f) You have a contract to provide catering services for a local company, INC Inc. for their monthly staff meetings. The contract, which was signed June 1, stated that they would pay you $6,000 on June 1st and again on December 1st for providing these services for one year. What is the adjusting entry required if your year-end is December 31st?
g) Your company is moving into a new office on July 1st. Your year-end is June30th. Part of your new lease agreement requires you to pay your first month's rent, $4,750, ahead of time. You signed the agreement and wrote the cheque on June 30th. What would be the entry to record this? What would be the entry you would make on July 31st to record rent for the month?