Reference no: EM132576664

Question -

a) Assume that rent of $ 12,000 was paid on September 1, to cover a one-year period from that date. Prepaid Rent was debited. If financial statements are prepared only on December 31 of each year, what adjusting entry is necessary on December 31 of the first year, to bring the accounts involved to their proper balances?

b) Supplies were purchased for cash on May 2 for $ 8,000. Show how this purchase would be recorded. Then show the adjusting entry that would be necessary, assuming that $ 2,500 of the supplies remained at the end of the year and the beginning balance for supplies was $500.

c) Assume that a company acquired a building on January 1, at a cost of $1,000,000. The building has an estimated useful life of 40 years and an estimated residual value of $200,000. What adjusting entry is needed on December 31 to record the depreciation for the entire year?

d) On September 1, Professional Golfer Journal, Inc., received a total of $120,000 as payment in advance for one-year subscriptions to a monthly magazine. A liability account was credited to record this cash receipt. By the end of the year, one-third of the magazines paid for in advance had been delivered. Give the entries to record the receipt of the subscription fees and to adjust the accounts at December 31, assuming annual financial statements are prepared at year-end.