Please help with the following anwer so I can compare for study guide accuracy.
ID: 2544662 • Letter: P
Question
Please help with the following anwer so I can compare for study guide accuracy. Thank you!
Kretz Corporation preapres monthly financial statements and therefore adjusts its accounts at the end of every month. The following information is available for March 2014:
a. Kretz Corporation takes out a 90 day, 8%, $15,000 note on March 1, 2014, with interest and principal to be paid at maturity.
b. The asset account Office Supplies on Hand has a balance of $1,280 on March 1, 2014. During March, Kretz adds $750 to the account for purchases during the period.A acount of the supplies on hand at the end of March indicates a balance of $1,370.
c. The company purchased office equipment last year for $62,600. The equipment has an estimated useful life of six years and an estimated salvage value of $5,000.
d. The campany's plant operates seven days per week with a daily payroll of $950.00. Wage earners are paid every Sunday. The last day of the month is Saturday, March 31.
e. The company rented an idle warehouse to a neighboring business on February 1, 2014, at a rate of $2,500 per month. On this date, Kertz Corporation credited Rent COllected in Adance for six months rent received in advance.
f. On March 1, 2014, Kretz Corp credited a liabiliyt account, Customers Deposits for $4,800. This sum represents an amount that a customer paid in advance and that Kertz will earn evenly over a four month period
g. Based on its income for the month, Kretz corp estimates that federal income taxes for March amount to $3,900.
REQUIRED
For each of the preceding situations, prepare in general journal form the approprite adjusting entry to be recorded on March 31, 2014.
Explanation / Answer
(a) Interest = 15,000*8%*1/12 = 100
Interest expense $100
Interest payable $100
(b) Supplies expense = 1280 + 750 - 1370 = 660
Supplies expense $660
Supplies $660
(c) Depreciation = (62,600 - 5,000) / 6 = 9,600
Depreciation expense $9,600
Accumulated depreciation $9,600
(d) Wages payable = 950 * 6 = 5,700
Wages expense $5,700
Wages payable $5,700
(e) Rent revenue = 2,500 *2 = 5,000
Unearned rent revenue $5,000
Rent revenue $5,000
(f) Deposit for 1 month = 4,800 / 4 = 1,200
Customer deposit $1,200
Revenue $1,200
(g)
Income tax expense $3,900
Income tax payable $3,900