Reference no: EM133050745

Question - Dodge Haulers is in the cargo business. The entity is servicing the cargo forwarding requirements of businesses within the Alphabet Island. At the end of the accounting year, Dec. 31, 2020, the following data must be considered to affect the adjusting entries.

a. On July 1, 2020, an eighteen-month insurance coverage on trucks was paid and debited to Prepaid Insurance. Premiums amounted to 72,000 and coverage began immediately.

b. During 2020, office supplies amounting to 18,000 were purchased for cash and debited to Office Supplies. At the end of 2019, the inventory count of supplies on hand was 2,000. Inventory of supplies as at Dec. 31, 2020 showed 3,500.

c. On Dec. 31, 2020, Bueno Motors completed repairs on one of the trucks at a cost of 8,000; the amount is not yet recorded and by agreement will be paid during Jan. 2021.

d. A real property tax assessment for 16,000 on land owned during 2020 was received from the city. The taxes, which are unpaid and unrecorded, are already due but the company intends to pay them on Feb. 15, 2021.

e. On Dec. 31, Dodge completed a bulk-hauling contract. The bill was for 85,000 payable within 30 days. No cash has been collected, and no journal entry has been made for this transaction.

f. On August 1, 2020, the company purchased a new hauling van at a cash price of 250,800. The estimated useful life of the van was 10 years, with an estimated residual value of 36,000. No depreciation has been recorded for 2020.

g. On Oct. 31, 2020, Dodge borrowed 250,000 from a multi-purpose cooperative on a 6-month, 12% per annum note payable. The principal plus interest is payable at the end of 6 months.

Additional information: The business is subject to 20% income tax.

h. Wages incurred on December 2020, unpaid and unrecorded, amounted to 37,000. The last payroll was December 28; next payroll will be January 6, 2021.

i. A portion of the office building was rented to Dante Specialty Shop for 5,200 per month, payable monthly. On December 31, 2020, the rent for November and December was not collected nor recorded. Collection is expected on January 10, 2021.

j. The business' office building costs 3,000,000 with an estimated useful life of 20 years and a residual value of 600,000.

Required - Explanations may be omitted

1) Prepare the adjusting entries.

2) Prepare the reversing entries. If not necessary, just write 'no reversing entry'.