The following information is available for M&M Johnson Inc.: The December 31, 2020, supplies inventory balance is $85,000. A count of supplies reveals that the company actually has $30,000 of supplies on hand. As of December 31, 2020, Johnson Inc. had not paid the rent for December. The monthly rent is $2,400. On December 20, 2020, Johnson collected $18,000 in customer advances for the subsequent performance of a service. Johnson recorded the $18,000 as unearned revenue, and as of December 31 two-thirds of the service had been performed. The total cost of Johnson’s fixed assets is $500,000. Johnson estimates that the assets have a useful life of ten years with zero salvage value and uses the straight-line method of depreciation. Johnson borrowed $10,000 at an annual rate of 12 percent on July 1, 2020. The first interest payment will be made on January 1, 2021. Johnson placed several ads in local newspapers during December. On December 31, the company received a $28,000 bill for the ads, which was not recorded at the time the company placed the ads. On July 1, 2020, Johnson paid the premium for a one-year life insurance policy. The $350 cost of the premium was capitalized as an asset when paid. Prepare the adjusting journal entries necessary for the 12 months ended December 31, 2020. 1- In adjusting entry a what is the amount of Supplies Expense?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following information is available for M&M Johnson Inc.:

The December 31, 2020, supplies inventory balance is $85,000. A count of supplies reveals that the company actually has $30,000 of supplies on hand.
As of December 31, 2020, Johnson Inc. had not paid the rent for December. The monthly rent is $2,400.
On December 20, 2020, Johnson collected $18,000 in customer advances for the subsequent performance of a service. Johnson recorded the $18,000 as unearned revenue, and as of December 31 two-thirds of the service had been performed.
The total cost of Johnson’s fixed assets is $500,000. Johnson estimates that the assets have a useful life of ten years with zero salvage value and uses the straight-line method of depreciation.
Johnson borrowed $10,000 at an annual rate of 12 percent on July 1, 2020. The first interest payment will be made on January 1, 2021.
Johnson placed several ads in local newspapers during December. On December 31, the company received a $28,000 bill for the ads, which was not recorded at the time the company placed the ads.
On July 1, 2020, Johnson paid the premium for a one-year life insurance policy. The $350 cost of the premium was capitalized as an asset when paid.

Prepare the adjusting journal entries necessary for the 12 months ended December 31, 2020.

1- In adjusting entry a what is the amount of Supplies Expense?

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