Reference no: EM132911640

Penny's Pool Service & Supply Inc. (PPSS) is completing the accounting process for the year just ended, December 31, 2020. The transactions during 2020 have been journalized and posted. The following data with respect to adjusting entries are available:

1. PPSS owed $800 wages to the office receptionist and three assistants for working the last two days in December. The employees will be paid in January 2021.
2. On October 1, 2020, PPSS received $24,000 from customers who prepaid pool cleaning service for one year beginning on November 1, 2020.
3. The company received a $520 utility bill for December utility usage. It will be paid in January 2021.
4. PPSS borrowed $30,000 from a local bank on May 1, 2020, signing a note with a 6 percent interest rate. The note and interest are due on May 1, 2021.
5. On December 31, 2020, PPSS cleaned and winterized a customer's pool for $800, but the service was not yet recorded on December 31.
6. On August 1, 2020, PPSS purchased a two-year insurance policy for $4,200, with coverage beginning on that date. The amount was recorded as prepaid insurance when paid.
7. On December 31, 2020, PPSS had $3,100 of pool cleaning supplies on hand. During 2020, PPSS purchased supplies costing $23,000 from Pool Corporation Inc. and had $2,400 of supplies on hand on December 31, 2019.
8. PPSS estimated that depreciation on its buildings and equipment was $8,300 for the year.
9. At December 31, 2020, $110 of interest on investments was earned that will be received in 2021.

Required:

Problem 1: Prepare adjusting entries for Penny's Pool Service & Supply Inc. on December 31, 2020.