OK I need some help with adjusting accounts here is the unadjusted amounts

Balances (unadjusted)

Account Debit Credit
Cash 60,260
Accounts Receivable 38,000
Allowance For Doubtful Accounts 2,000
Inventory (Periodic) 80,000
Sales Supplies Inventory 900
Long-Term Note Receivable, 14% 12,000
Equipment 180,000
Accumulated Depreciation, Equip. 64,000
Patent 8,400
Interest Receivable
Accounts Payable 23,000


1.) Interest on the long-term note receivable was last collected August 31, 2009.

I was thinking that it would 12,000x.14= 1680

and it would be a 1680 debit to Interest Recievable and a 1680 credit to Interest Revenue

2) Ending inventory, December 31, 2009, $105,000.

Would it be 105,000 -80,000= 25000

so debit to Inventory 25,000 and credit to accounts payable 25,000

1.) Interest on the long-term note receivable was last collected August 31, 2009.

I was thinking that it would 12,000x.14= 1680

and it would be a 1680 debit to Interest Recievable and a 1680 credit to Interest Revenue

The accounts are correct. The dollar amount is not. First, you should always put the date the entries are being made. I only knew it was 12/31 because you included that on the inventory one.

The 14% is interest for a full year. If interest was last collected at the end of August, how many months are now earned and receivable? Not a full year.


2) Ending inventory, December 31, 2009, $105,000.

Would it be 105,000 -80,000= 25000

so debit to Inventory 25,000 and credit to accounts payable 25,000

You've interpreted this to mean that 25,000 more inventory was purchased, on account. You would not be making an adjusting entry just for a normal purchase of inventory.

You have to understand how the periodic method works. That means you have a beginning balance in the inventory which is never touched. That is, if you make a purchase, it's not put into the inventory account, and if it's sold, it's not taken out. That's perpetual method. In periodic, that inventory account sits there at its beginning balance for the entire year. Purchases are expensed immediately, and then there's an adjustment made that will determine the cost of goods sold for the year. Part of this adjustment involves those inventory balances.

The $80,000 was the beginning balance, not the balance prior to adjusting entries. (i.e. they didn't just buy $25,000 worth of inventory. That's not an adjusting entry.) The $105,000 is the inventory count at the end of the year. So the inventory has to be adjusted to account for that.

There's more than one way to make this adjustment, but somehow you have to get old balance out and the new balance in. The method I learned is:
Dr. Income Summary
Cr. Inventory
for the old balance to remove it

Dr. Inventory
Cr. Income Summary
to put in the new balance

Then the number in income summary becomes part of another adjustments to get cost of goods sold. However, I've seen other methods -- perpetual's not used much anymore so I don't know what texts are typically doing these days. It could adjust through cost of goods sold, through purchases, in other countries I've seen like a "P&L account" whatever that is. This entry should be in your text and you need to look it up.