5.1 Determine the necessary end –of-June adjustments for Evenson Company.

1. On June 1, 2010, Evenson company, a new firm, paid $4500 rent in advance for a 6 month period. The $4500 was debited to the Prepaid Rent account.

2. On June 1, 2010, the firm bought supplies for $4750. The $4750 was debited to the Supplies account. An inventory of supplies at the end of June showed that items costing $1800 were on hand.

3. On June 1, 2010, the firm bought equipment costing $54000. The equipment has an expected useful life of 10 years and no salvage value. The firm use the straight-line method of depreciation.

5.2 For each of the following situations, determine the necessary adjustments.

1. A firm purchased a 2 year insurance policy for $3000 on July 1, 2010. The $3000 was debited to the prepaid Insurance account. What adjustment should be made to record expired insurance on the firm’s July 31, 2010 worksheet?

2. On December 1, 2010, a firm signed a contract with a local radio station for advertising that will extend over a 1 year period. The firm paid $10800 in advance and debited the amount to Prepaid Advertising. What adjustment should be made to record expired advertising on the firm’s December 31, 2010, worksheet?

 

Problems

University Book Store

Adjusted Trial Balance

November 30, 2010

Debit Credit

Cash 45150

Accounts rec 6624

Supplies 7200

Prepaid Rent 36000

Equipment 54000

Accumulated Dep- equip 1400

Accounts Payable 16000

Julie Acker Cap 81674

Julie Acker, Drawing 6000

Fees Income 84000

Dep expense-equip 1400

Rent Expense 6000

Salaries expense 15000

Supplies Expense 4800

Utilities Expense 900

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183074 183074

5.2A Appropriate adjustments have been made for the following items.

a. supplies used during the month, $4800.

b. Expired rent for the month, $6000.

c. Depreciation expense for the month, $1400.

1. Record the Adjusted Trial Balance in the Adjusted Trial Blance columns of the worksheet.

2. Prepare the adjusting entries in the Adjustments columns.

3. Complete the Trial Balance columns of the worksheet prior to making the adjusting entries.

Analyze: What was the balance of Prepaid Rent prior to the adjusting entry for expired rent?