Chapter 3, Problem 42AP

Problems (Group A)

Common adjusting journal entries (Learning Objective 2) 15-20 min.

Journalize the adjusting entry needed at December 31, the end of the current accounting yean for each of the following independent cases affecting Premier Powersports, Inc. No other adjusting entries have been made for the year.

1. a. Prior making the adjusting entry on December 31, the balance in Prepaid Insurance is $4,800. Premier Powersports, Inc., pays liability insurance each year on June 1.
2. b. Premier Powersports, Inc., pays employees each Friday. The amount of the weekly payroll is $6,500 for a five-day workweek. December 31, the fiscal year-end, is a Tuesday.
3. c. Premier Powersports, Inc., received notes receivable from some customers for services provided. For the current year, accrued interest amounts to $835 and will be collected next year.
4. d. The beginning balance of Supplies was $900. During the year, $3,800 of supplies were purchased. At December 31, the supplies on hand total $1,400.
5. e. During the year, Premier Powersports, Inc., received $12,500 in advance for services to be provided at a later date. As of December 31, Premier Powersports, Inc,, earned $8,900 of the total fees received in advance during the current year.
6. f. Depreciation for the current year includes Vehicles, $2,550, and Equipment, $1,000.