Reference no: EM13912461
Among other items, the trial balance of Lawnmaster, Inc a lawn care company, at December 31of the current year includes the following account balances:
Prepaid Insurance $10,000
Prepaid Rent $12,000
Supplies on Hand $3,300
Examination of the records shows that adjustments should be made for the following items:
a. Of the prepaid insurance in the trial balance, $ 5,000 is for coverage during the months after
December 31 of the current year.
b. The balance in the Prepaid Rent account is for a 12-month period that started October 1 of the
current year.
c. $ 200 of interest has been earned but not received.
d. Supplies used during the year amount to $ 1,200.
Prepare the annual year-end adjusting journal entries at December 31.
Problem 2
Broker Mini-Storage, Inc., adjusts and closes its books each December 31. Assume the accounts
for all prior years have been properly adjusted and closed. Following are some of the company's
account balances prior to adjustment on December 31, 2014:
Broker Mini-Storage, INC.
Partial Trial Balance
December 31, 2010
Debit Credit
Prepaid Insurance 7,500.00
Supplies on Hand 7,000.00
Buildings 255,000.00
Accumulated Depreciation - Buildings
96,000.00
Unearned Rent
2,700.00
Salaries Expense 69,000.00
Rent Revenue
277,500.00
The Prepaid Insurance account balance represents the remaining cost of a four-year insurance
policy dated June 30, 2015, having a total premium of $ 12,000.
The physical inventory of the office supply stockroom indicates that the supplies on hand cost $
3,000.
The building was originally acquired on January 1, 1994, at which time management estimated
that the building would last 40 years and have a residual value of $ 15,000.
Salaries earned since the last payday but unpaid at December 31 amount to $ 5,000.
Interest earned but not collected on a savings account during the year amounts to $ 400.
The Unearned Rent account arose through the prepayment of rent by a tenant in the building for
12 months beginning October 1, 2014.
Prepare the annual year-end adjusting entries indicated by the additional data.
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