Chapter 11, Problem 5E

Journalize the required adjusting entries for the year ended December 31 for Butler Spa and Pool Accessories. Butler Spa and Pool Accessories uses the periodic inventory system.

a–b. On December 31, a physical count of inventory was taken. The physical count amounted to $22,624. The Merchandise Inventory account shows a balance of $21,696.

c. On July 1 of this year, $2,400 was paid for a one-year insurance policy.

d. On November 1 of this year, $420 was paid for three months of advertising.

e. As of December 31, the balance of the Unearned Membership Fees account is $15,600. Of this amount, $9,200 has been earned.

f. Equipment purchased on May 1 of this year for $8,000 is expected to have a useful life of five years with a trade-in value of $500. All other equipment has been fully depreciated. The straight-line method is used.

g. As of December 31, three days’ wages at $250 per day had accrued.

h. As of December 31, the balance of the supplies account is $4,200. A physical inventory of the supplies was taken, with an amount of $1,650 determined to be on hand.