Reference no: EM132326187
Question
Gilgen's Grill, an upscale restaurant on the beach, has just completed its first full year of operations on December 31, 2017. It provides meals both in its restaurant and catering. Selected balances, in alphabetical order, from the general ledger before year-end adjustments follow (All balances are normal):
Accounts Payable 42,400
Accounts Receivable 36,000
Common Stock 24,000
Cash 64,000
Equipment 91,200
Notes Payable 34,000
Prepaid Advertising 4,800
Rent Expense 12,000
Sales Revenue 196,000
Supplies 3,600
Utilities Expense 5,500
Wages Expense 108,000
An analysis of the firm's records reveals the following:
The balance in Prepaid Advertising represents the amount paid for newspaper advertising for 1 year. The agreement, which calls for the same amount of space each month, covers the period from February 1, 2017 to January 31, 2018. Gilgen's Grill did not advertise during its first month of operations.
Equipment purchased January 1, 2017, has an estimated life of eight years.
Utilities expense does not include the expense for December, estimated at $1,200,. The bill will not arrive until January 2018.
At year-end, employees have earned $12,400 in wages that will not be paid until January.
Supplies available at year-end amounted to $1,300
At year-end, unpaid interest of $400 has accrued on the notes payable.
The firm's lease calls for rent of $1,000 per month payable on the first of each month, plus an amount equal to 1% of annual sales, The rental percentage is payable within 15 days after the end of the year.
INSTRUCTIONS: Prepare an adjusted entries in journal entry form.