Reference no: EM132683400

Waterway Corporation began operations on January 2. Its year end is December 31, and it adjusts its accounts annually. Selected transactions for the current year follow:

1. On January 2, purchased supplies for $4,320 cash. A physical count at December 31 revealed that $730 of supplies were still on hand.

2. Purchased a vehicle for $41,800 on April 1, paying $5,200 cash and signing a $36,600 bank loan for the balance. The vehicle is estimated to have a useful life of 5 years and the company uses straight-line depreciation. The bank loan has an interestof 3%

3. Purchased a $3,780, one-year insurance policy for cash on August 1. The policy came into effect on that date.

4. Received a $1,700 advance cash payment from a client on November 9 for services to be performed in the future. As at December 31, half of these services had been completed.

5. On December 1, the company rented additional office space for a six-month period starting on December 1 for $1,170 each month. It paid rent for the months of December and January in advance on this date.

Problem 1: What will be the adjusting entries at December 31 if the company closes its books at this date