Reference no: EM132809901
Elway Corporation prepares its financial statements annually, with adjusting journal entries recorded at year-end. The following items have not yet been addressed for the fiscal year ended December 31, 2017. Assume that the original transactions have been recorded correctly or as described.
Elway has a bank loan of $250,000, which has been outstanding for the entire year. The interest has not been paid or recorded for the second half of the year (i.e., 6 months). Interest is based on 8% per year.
Item #2
On December 1, Elway rented out excess office space for a six-month period starting on the same date. The company received $2,200 for the first two months' rent.
Item #3
Depreciation on a printing machine has not been recorded. The machine was purchased in 2014. The machine has an original cost of $250,000, a residual value of $5,000, and a useful life of seven years. Elway uses the straight-line method of depreciation.
Item #4
The allowance for doubtful accounts currently has a balance of $42,000. The company has estimated the amount of uncollectible customer accounts to be $56,000.
Item #5
The supplies inventory account had a balance of $8,000 at the beginning of the year. Supplies costing $41,000 were purchased during the year. There is an inventory of $12,000 physically on hand at the end of the year.
Required:
Problem 1: For each item listed above, prepare the adjusting journal entry/entries at December 31, 2017. If a journal entry is not required, you must explain why.
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