5 From the following information prepare adjusting entries in the general journa

Question

5 From the following information prepare adjusting entries in the general journal and enter them in the work sheet. a The annual provison for doubtful accounts receivable is recorded by providing a charge to Bad Debt Expense in an amount equal to 2.2% of net credit sale. All cash sales were executed in December. b An inventory count of the office supplies revealed $850 of supplies on hand at year end. c The prepaid insurance on January 1, 2014 was $3,220, which covers the period January 1 through August 31, 2014. The insurance premium of $7,800 recorded in August covers the period of September 1, 2014 through August 31, 2015. Rockford estimates that 60% of the premiums are attributable to general activities (Use Insurance Expense) and 25% to selling activities. (Use Miscellaneous Expense). d The payroll summary for the employees who are paid biweekly shows the following information at December 31, 2014: Delivery and Warehouse Wages $6,100 FICA Taxes Payable 430 Federal Withholding Taxes 1,036 State Withholding Taxes 218 Net pay 4,416 (will pay in 2015) e The employer's share of the FICA tax ($430) must be accrued; no state or federal unemployment tax is incurred during the fourth quarter because all wages and salries earned during the last quarter exceed the manimum subject to unemployment tax. f Interest has accrued at 7% on the long-term notes payable since July 1,2014. These interests are due on January 1, 2015 (The first six-month interests have been recorded and paid in July). Interest on bonds is accrued and paid semi-annually, at a 4% annual coupon rate. The next interest payment is due on January 1, 2015. The bonds are dated January 1, 2008, and mature January 1, 2018. Market interest rate was 6% at issurance . Use effective interest amortization method. g The interest accrued to 12/31/14 on notes receivable is composed of the following: Platteville Plumbers, 10%, 6 months, due March 31, 2015 $1,325 Bilder Construction, 11%, 6 months, due June 14, 2015 232 Beverly's Building, 9%, 6 months, due June 26, 2015 17 $1,574 The interst accrued at 12/31/14 on the note payable (current) of $15,000 is $1,200. Interest is payable on January 2, 2015. (The note is due in 2015) h A warehouse lease payment of $9,600 was made on Septermber 1, 2014, for rental through February 28, 2015. (The Prepaid Rent account is for advance lease payments on the warehouse.) i $730 is owned to Northern Electric Co. and $279 is owned to City of Rockford for utility services proved during December 2014. j Plant and equipmentto be depreciated are composed of the following: Assets Date
Acquired cost estimated
usage or life salvage
value depreciation
method Building 7/1/2010 $306,000 25 years $20,000 sum-of-years' digits Truck #1 4/1/2010 28,000 60,000 miles 3,100 miles driven Truck #2 9/1/2011 33,000 60,000 miles 4,200 miles driven Lift Truck #1* 8/17/2007 7,900 10 years 900 straight-line Lift Truck #2 3/29/2011 4,500 10 years 500 straight-line Lift Truck #3 9/16/2012 5,000 10 years 500 straight-line Office Equipment Prior to 1/1/14 32,800 7 years 2,000 straight-line Computer 12/19/2014 6,100 4 years 1,300 Double-decling * sold 12/31/14 Truck No. 1has been driven 45,000 miles prior to 1/1/14 and truck No. 2 has been driven 30,500 miles prior to 1/1/14. During 2014 truck No. 1 was driven 13,000 miles and truck No. 2 was driven 17,000 miles. Remember that Rockford Company takes a half-year's depreciation in the year of acquisition and a half- year in the year of sale. 5 From the following information prepare adjusting entries in the general journal and enter them in the work sheet. a The annual provison for doubtful accounts receivable is recorded by providing a charge to Bad Debt Expense in an amount equal to 2.2% of net credit sale. All cash sales were executed in December. b An inventory count of the office supplies revealed $850 of supplies on hand at year end. c The prepaid insurance on January 1, 2014 was $3,220, which covers the period January 1 through August 31, 2014. The insurance premium of $7,800 recorded in August covers the period of September 1, 2014 through August 31, 2015. Rockford estimates that 60% of the premiums are attributable to general activities (Use Insurance Expense) and 25% to selling activities. (Use Miscellaneous Expense). d The payroll summary for the employees who are paid biweekly shows the following information at December 31, 2014: Delivery and Warehouse Wages $6,100 FICA Taxes Payable 430 Federal Withholding Taxes 1,036 State Withholding Taxes 218 Net pay 4,416 (will pay in 2015) e The employer's share of the FICA tax ($430) must be accrued; no state or federal unemployment tax is incurred during the fourth quarter because all wages and salries earned during the last quarter exceed the manimum subject to unemployment tax. f Interest has accrued at 7% on the long-term notes payable since July 1,2014. These interests are due on January 1, 2015 (The first six-month interests have been recorded and paid in July). Interest on bonds is accrued and paid semi-annually, at a 4% annual coupon rate. The next interest payment is due on January 1, 2015. The bonds are dated January 1, 2008, and mature January 1, 2018. Market interest rate was 6% at issurance . Use effective interest amortization method. g The interest accrued to 12/31/14 on notes receivable is composed of the following: Platteville Plumbers, 10%, 6 months, due March 31, 2015 $1,325 Bilder Construction, 11%, 6 months, due June 14, 2015 232 Beverly's Building, 9%, 6 months, due June 26, 2015 17 $1,574 The interst accrued at 12/31/14 on the note payable (current) of $15,000 is $1,200. Interest is payable on January 2, 2015. (The note is due in 2015) h A warehouse lease payment of $9,600 was made on Septermber 1, 2014, for rental through February 28, 2015. (The Prepaid Rent account is for advance lease payments on the warehouse.) i $730 is owned to Northern Electric Co. and $279 is owned to City of Rockford for utility services proved during December 2014. j Plant and equipmentto be depreciated are composed of the following: Assets Date
Acquired cost estimated
usage or life salvage
value depreciation
method Building 7/1/2010 $306,000 25 years $20,000 sum-of-years' digits Truck #1 4/1/2010 28,000 60,000 miles 3,100 miles driven Truck #2 9/1/2011 33,000 60,000 miles 4,200 miles driven Lift Truck #1* 8/17/2007 7,900 10 years 900 straight-line Lift Truck #2 3/29/2011 4,500 10 years 500 straight-line Lift Truck #3 9/16/2012 5,000 10 years 500 straight-line Office Equipment Prior to 1/1/14 32,800 7 years 2,000 straight-line Computer 12/19/2014 6,100 4 years 1,300 Double-decling * sold 12/31/14 Truck No. 1has been driven 45,000 miles prior to 1/1/14 and truck No. 2 has been driven 30,500 miles prior to 1/1/14. During 2014 truck No. 1 was driven 13,000 miles and truck No. 2 was driven 17,000 miles. Remember that Rockford Company takes a half-year's depreciation in the year of acquisition and a half- year in the year of sale.

Explanation / Answer

Journal Entries S.no. Particulars Debit Credit a No Entry ( All sales were on cash) b Office supplies Expense Office supplies ( opening Supplies in hand amount is missing so amount will be Supplies in Hand - Supplies in hand on count = Office Supplies expense) c Insurance expense 3,220 Prepaid Insurance 3,220 c Prepaid insurance 2600 Insurance expenses 2,600 (Prepaid insurance = 7,800 X 4/12 = 2600) c Miscellaneous expense 1300 Insurance expense 1,300 , (Miscellaneous expense = ( 7,800 - 2,600) X 25% = 1,300) d Salary & Wages expenses 6100 FICA Taxes Payable 430 Federal Witholding Tax payable 1036 State witheld tax payable 218 Wages payable 4416 e FICA Tax expense 430 FICA Taxes Payable 430 f Interest expense Interest Payable ( Amount of Note payable Missing) (Amount of interest = Amount of Note X 7% X 6/12) Ask other parts seperately by mentioning the left parts

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