Adjusting entries
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1. Adjusting entries.
Present, in journal form, the adjustments that would be made on July 31, 2011, the end of the fiscal year, for each of the following.
1.The supplies inventory on August 1, 2010 was $7,350. Supplies costing $20,150 were acquired during the year and
charged to the supplies inventory. A count on July 31, 2011 indicated supplies on hand of $8,810.
2.On April 30, a ten-month, 9% note for $20,000 was received from a customer.
3.On March 1, $12,000 was collected as rent for one year and a nominal account was credited
2. Adjusting entries.
Reed Co. wishes to enter receipts and payments in such a manner that adjustments at the end of the period will not require reversing entries at the beginning of the next period. Record the following transactions in the desired manner and give the adjusting entry on December 31, 2010. (Two entries for each part.)
1. An insurance policy for two years was acquired on April 1, 2010 for $8,000.
2. Rent of $12,000 for six months for a portion of the building was received on November 1, 2010.
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The solution explains the adjusting entries for the given transactions
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1.1. Total supplies available = 7,350 (beginning) + 20,150 (purchases) = 27,500. The actual supplies at hand are 8,810. This would imply that supplies worth 27,500-8,810 = 18,690 are consumed. The adjusting entry is
Supplies Expense Dr 18,690
Supplies Inventory Cr 18,690
2. We need to accrue the interest receivable on the note for 3 months from May 1 to July ...
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