Chapter 3, Problem 5P

At the end of its fiscal year, Berwyn Cleaners’ trial balance is as follows.

The following information is also available:

1. a. A study of the company’s insurance policies shows that $680 is unexpired at the end of the year.
2. b. An inventory of cleaning supplies shows $1,244 on hand.
3. c. Estimated depreciation on the building for the year is $12,800.
4. d. Accrued interest on the mortgage payable is $1,000.
5. e. On September 1, the company signed a contract, effective immediately, with Hope County Hospital to dry clean, for a fixed monthly charge of $400, the uniforms used by doctors in surgery. The hospital paid for four months’ service in advance.
6. f. Sales and delivery wages are paid on Saturday. The weekly payroll is $2,520. September 30 falls on a Thursday, and the company has a six-day pay week.

REQUIRED

All adjustments affect one balance sheet account and one income statement account. For each of the above situations, show the accounts affected, the amount of the adjustment (using a + or – to indicate an increase or decrease), and the balance of the account after the adjustment in the following format: