For each of the following situations, prepare the appropriate adjusting entry to
ID: 2423200 • Letter: F
Question
For each of the following situations, prepare the appropriate adjusting entry to be recorded on March 31, 2014. Do not round intermediate calculations. If required, round your final answers to the nearest dollar.
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. Assume a 360-day year.
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 count 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. Use the straight line method of depreciation.
d. The company's plant operates seven days per week with a daily payroll of $950. 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, Kretz Corporation credited Rent Collected in Advance for six months' rent received in advance.
f. On March 1, 2014, Kretz Corporation credited a liability account, Customer Deposits, for $4,800. This sum represents an amount that a customer paid in advance and that Kretz will earn evenly over a four-month period.
g. Based on its income for the month, Kretz Corporation estimates that federal income taxes for March amount to $3,900.
Explanation / Answer
Date Account Head Debit Credit Mar-31 Interest 103.3333 Interest Payable 103.3333 Mar-31 Office Supplies Expense 660 Office Supplies on hand 660 Mar-31 Depreciation-Office Equipment 800 Accumulated Depeciation 800 Mar-31 Wages 5700 Wages Outstanding 5700 Mar-31 Rent collected in advance 416.6667 Rental Income 416.6667 Mar-31 Customer Deposits 1200 Revenue 1200 Mar-31 Income Tax Expense 3900 Provision for taxation 3900
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