I need help.Thanks. I posted the templates of the assignment. the necessary adju
ID: 2551357 • Letter: I
Question
I need help.Thanks. I posted the templates of the assignment.
the necessary adjusting entries tr Drake at the end or 2 10, nal entry explanations rs.2 Adjusting Entries Clapton Guitar Company entered into the following transactions during 2016. IThe transic tions were properly recorded in permanent (balance shect) accounts unless otherwise indicated. Date lan. 25 Purchased $480 of office supplies Feb. Rented a warehouse from Hendrix Company, paying 1 year's rent of $3,600 in advance. Recorded the 53,600 Mar. 1 Borrowed $ 10,000 from the bank, signing a 1-year note at an annualinterest rate of 1 2%. The bank insisted on moral pumal, amal payment as rent expense. atements Ac the ent of collecting the interest in advance, so it withheld the interest amount from the funds disbursed to Clapton. The company recorded the transaction as a debit to Cash, $8,800, a debit to Interest Expense, $1,200, and a credit to Notes Payable, $10,000 Purchased office equipment for $15,000, paying $3,000 down and signing a 2year, 12% annual rate note payable for the balance. The office equipment is expected to have a useful life of 10 years and a residual value of $1,500. Stroight-line depreciation is appropriate. May May 31 1 Purchased a 3-year comprehensive insurance policy for $720 Aug. Oct. Nov. 13 Issued checks to sales personnel totaling $900. The checks are advances for expected travel costs during the On December 31, 2016, the following additional information is available Sold lor d for $9 000. The purchaser made a $2,000 down payment and sgne balance. The interest and principal will be collected on the moturity date. Rented a portion of the retail floor space to Harrison Inc, for $120 per month, collecting 8 months' rent in advance. Recorded the $960 receipt as rent revenue o lyear, 10% efort 1 cludes cash 12,700 was pad N00 was withdr remainder of the year wed supplicrs s depreciating 1. Property taxes for 2016 are due to be paid by April 2017. The company has not paid or recorded its S2 300 property taxes for 2016. 2. The S302 December utility bill has not been recorded or paid. 3. Salaries accrued but not paid total $927 4. Travel cost reports indicate that $787 of the $900 advanced has been used to pay for travel expenses by com- ns ) calculation pany personnel. 5. The Office Supplies account had a balance of S129 on January 1, 2016. A physical count on December 31, 2016, showed $174 of office supplies on hand. 6. On January 1, 2016, the Buildings account and the Store Equipment account had balances of $100,000 and S65,000, respectively. The buildings are expected to have a 20-ycar useful life and an $8,000 residual value, store equipment is expected to have a 10-year life and a $2,000 residual value. They are being depre- 2017, The pretax income of On the basis of the preceding information, prepare journal entries to adjust Clapton's books as of December 31, ciated using the straight-line method. The income tax rate is 30% on current income and is payable in the first quarter of the company before adjustments is $27,749 7. upment w ne meth Required: 2016. Each entry explanation should include supporting con computations. (Round to the nearest dollar.)Explanation / Answer
Journal Entry Date Particulars Dr. Amt. Cr. Amt. 31-Dec Ofiice Supplies Expense 435 $129 + $480 -$174 Office Supplies 435 (To record the Office Supplies used) 31-Dec Prepaid Rent 300 $3,600 X 1/12 Rent Expense 300 (To recognize prepaid rent) 31-Dec Prepaid Interest 200 $1,200 X 2/12 Interest Expense 200 (To recognize prepaid interest) 31-Dec Depreciation Expense 11,800 Accumulated Depreciation - Furniture 900 ($15,000 - $1,500) / 10 Years X (8/12) Accumulated Depreciation - Building 4,600 ($100,000 - $8,000) / 20 Years Accumulated Depreciation - Store Equipment 6,300 ($65,000 - $2,000) / 10 Years (To recognize Depreciation expense) 31-Dec Interest Expense 960 $12,000 X 12% X 8/12 Interest Payable 960 (To record accrued Interest on Note Payable) 31-Dec Insurance Expense 140 $720 X 7/36 Prepaid Insurance 140 (To record expired Insurance) 31-Dec Interest Receivable 292 $7,000 x 10% X 5/12 Interest Revenue 292 (To record earned but uncollected interest revenue) 31-Dec Rent Revenue 600 $960 X 5/8 Unearned rent Revenue 600 (To record unearned rent) 31-Dec Travelling Expense 787 Advance Travelling Expense 787 (To record travel expense incurred by sales personnel) 31-Dec Property Tax Expense 2,300 Property Tax Payable / Accounts Payable 2,300 (To record Property Tax Expense for the year) 31-Dec Utility Expense 302 Utility Payable / Accounts Payable 302 (To record unpaid utility bill) 31-Dec Salaries & Wages Expense 927 Salaries & Wages Payable 927 (To record accrued salaries) 31-Dec Income Tax Expense 3,087 Income Tax Liability 3,087 (to record income tax liability on current earnings) Unadjusted Income 27,749 Office Supplies Expense (435) Rent Expense 300 Interest Expense 200 Depreciation Expense (11,800) Interest Expense (960) Insurance Expesne (140) Interest Revenue 292 Rent Revenue (600) Travelling Expense (787) Property Tax Expense (2,300) Utility Expense (302) Salaries & Wages Expense (927) Adjusted Income 10,290 Income Tax - 30% X $10,290 3,087