Question: Jaguar Auto Company provides general car maintenance to customers. The company's fiscal year-end is December 31. The December 31, 2012, trial balance (before any adjusting entries) appears below.
Information necessary to prepare the year-end adjusting entries appears below.
a. Depreciation on the machines for the year is $9,000.
b. Employee salaries are paid every two weeks. The last pay period ended on December 23. Salaries earned from December 24 through December 31, 2012, are $3,000.
c. On September 1, 2012, Jaguar borrows $30,000 from a local bank and signs a note. The note requires interest to be paid annually on August 31 at 9%. The principal is due in five years.
d. On March 1, 2012, the company purchases insurance for $18,000 for a one-year policy to cover possible injury to mechanics. The entire $18,000 is debited to Prepaid Insurance at the time of the purchase.
e. $4,000 of supplies remains on hand at December 31, 2012.
f. On December 30, Jaguar receives a utility bill of $1,700 for the month. The bill will not be paid until early January 2013, and no entry is recorded when the bill is received.
Required: Prepare the necessary adjusting entries on December 31, 2012.