Reference no: EM132697592

Problem 1: For each of the following independent situations prepare the required adjusting journal entry. Assume the economic events were correctly recorded initially. In all cases assume that the year-end is December 31st.

A) The company paid $3,000 for a 12-month insurance policy on April 1st. The entire amount was recorded as prepaid insurance at that time and no adjustments have been made since.
B) The company sold gift certificates totalling $8,000 in the Christmas season. By the end of December $1,500 had been redeemed.
C) The company owned equipment that originally cost $500,000 and was expected to last 20 years. They have owned it for 4 years.
D) The company lent $25,000 to a shareholder and is charging 4% interest on it. The loan has been outstanding all year. The company has been accruing the interest on it monthly although the shareholder is only going to pay the interest when they repay the loan.
E) Employees are paid on Fridays for that week's work. December 31st was a Wednesday this year and the daily payroll is $200.