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# Conti Company Preparing Adjusting Entries

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On June 30, the end of the current fiscal year, the following information is available to Conti Company's accountants for making adjusting entries:
a. Among the liabilities of the company is a mortgage payable in the amount of \$260,000. On June 30, the accrued interest on this mortgage amounted to \$13,000.
b. On Friday, July 2, the company, which is on five-day workweek and pays employees weekly, will pay its regular salaried employees \$18,700.
c. On June 29, the company completed negotiations and signed a contract to provide monthly services to a new client at an annual rate of \$7,200.
d. The supply account shows a beginning balance of \$1,615 and purchases during the year of \$4,115. The end-of-year inventory reveals supplies on hand of \$1,318.
e. The Prepaid insurance account shows the following entries on June 30:
Beginning balance \$1,620
January 1 2,900
May 1 3,366

The beginning balance represents the unexpired portion of a on0year policy purchased in April of the previous year. The January 1 entry represents a new one-year policy, and the May 1 entry represents the additional coverage of three-year policy.

f. The following table contains the cost and annual depreciation for buildings and equipment, all of which were purchased before the current year:

Account Cost Annual Depreciation
Buildings \$170,000 \$7,300
Equipment 218,000 20,650

g. On June 1, the company completed negotiations with another client and accepted an advance of \$21,600 for services to be performed in the next year. The \$21,600 for services to be performed in the next year. The \$21,600 was credited to unearned service revenue.
h. The company calculates that as of June 30 it had earned \$4,500 on a \$7,500 contract that will be completed and billed in August.

Required:
1. Prepare adjusting entries for each item listed above
2. Explain how the conditions for revenue recognition are applied to transactions C & H.

#### Solution Preview

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Anna, 108710

On June 30, the end of the current fiscal year, the following information is available to Conti Company's accountants for making adjusting entries:
a. Among the liabilities of the company is a mortgage payable in the amount of \$260,000. On June 30, the accrued interest on this mortgage amounted to \$13,000.
b. On Friday, July 2, the company, which is on five-day workweek and pays employees weekly, will pay its regular ...

#### Solution Summary

The expert prepares adjusting entries for Conti Company.

\$2.19