Chapter 3, Problem 48BP

Problems (Group B)

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

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

1. a. Before making the adjusting entry on December 31, the balance in Prepaid Insurance is $6,000. Canyon Motorsports, Inc., pays liability insurance each year on July 1.
2. b. Canyon Motorsports, Inc., pays employees each Friday. The amount of the weekly payroll Is $8,500 for a five-day workweek. December 31, the fiscal year-end, is a Wednesday.
3. c. Canyon Motorsports, Inc., received notes receivable from some customers for services provided. For the current year, accrued interest amounts to $875 and will be collected next year.
4. d. The beginning balance of Supplies was $1,750. During the year, $3,175 of supplies were purchased. At December 31, the supplies on hand total $1,300.
5. e. During the year, Canyon Motorsports, inc., received $15,400 in advance for services to be provided at a later date. As of December 31, Canyon Motorsports, Inc., earned $13,800 of the total fees received in advance during the current year.
6. f. Depreciation for the current year includes Vehicles, $2,170, and Equipment, $1,100.