1 Attachment(s)
Adjusting Entry Project Difficulty
I am currently working on my accounting project. I am doing adjusted entries, and can't seem to get my accounts to balance. I know I am doing something wrong. I was wondering if someone could tell me what I am doing right. My balance keeps ending at $83, 278. But my professor says it should be at $115,803. Can someone please tell me where I am messing up?
a. On May 1, 2008 a 12-month insurance policy was purchased for $12,000.
Prepaid Insurance Exp. 8000
Prepaid Insurance 8000
b. On June 1, 2008, Marchand & Co. paid Gretsky Advertising $36,000 for one year of advertising services.
Advertising Expense 21,000
Advertising 21,000
c. Marchand & Co. needed some additional storage space so on February 1, 2008 they rented a unit for an annual rate of $16,000. The entire amount was expensed when paid.
Rent Expense 13,334
Prepaid Rent 13,334
d. $4,250 of store supplies were purchased during the year and the asset store supplies was increased. $3,750 of these supplies was used during the year.
Store Supplies Expense 3750
Supplies 3750
e. $7,500 of office supplies were purchased during the year and were immediately expensed. $1,250 of these supplies remained at the end of 2008.
Office Supplies Expense 1250
Office Supplies 1250
f. On July 1, 2008, Marchand & Co. issued a 9-month note receivable to Shanahan & Co. at an annual interest rate of 7%. Principal and interest will be paid at the end of the 9-month period. The note was recorded in Notes Receivable and is the only note outstanding.
Interest receivable 1494
Interest Revenue 1494
g. Depreciation for the year is based on the following:
• Straight line depreciation
• Store equipment – Assets were held for the entire year; Residual Value = $3,000; Service life is estimated to be 5 years.
Accum. Dep-Store 7300
Depreciation Exp 7300
• Office equipment – Assets were held for the entire year; Residual Value = $3,000; Service life is estimated to be 5 years.
(No adjustment)
h. Sales salaries of $3,200 and office salaries of $5,800 remained unpaid at 12/31/08
Sales Salaries Expense 3200
Office Salaries Expense 5800
Salaries Payable 9000
I. On October 1, 2008, Marchand & Co. rented a portion of one store to Twist & Chase Co. The contract was for 6 months and Marchand & Co. required the 6 months of cash upfront on October 1st. The rent is being earned equally over the next 6 months. When cash was received, unearned rent was appropriately recorded. ($16,000)
Unearned Revenue 8000
Rent Revenue 8000
j. The note payable was outstanding the entire year and a 4.75% interest rate exists on the note. No interest has been recorded for the year. ($140,000)
Interest Expense 6650
Interest Payable 6650
k. At 12/31/2008, based on the aging method, Marchand & Co. determines that uncollectible accounts are $5,500. (Uncollectible acct already has a $2000 balance)
Bad Debt Expense 3500
Uncollectible Accounts 3500
The acct balances before adjusting entries are attached. PLEASE HELP ME. I DO NOT KNOW WHAT I AM DOING WRONG!