[heyitssg]

I just want to make sure I am doing these right. I need to prepare in journal entry form the ADJUSTING journal entries at 12/31/11.

1. On April 1, 2011 a 12-month insurance policy was purchased for $18,000.
2. On January 1, 2011 Hullie & Oates paid Gretsky Advertising $48,000 for two years of advertising services. Equal services are provided in year 1 and year 2.
3. Hullie & Oates needed some additional storage space so on November 1, 2011 they rented a unit for an annual rate of $10,200. The entire amount was expensed when paid.
4. $4,250 of store supplies were purchased during the year and the asset store supplies was increased. $3,850 of these supplies were used during the year.
5. $6,500 of office supplies were purchased during the year and were immediately expensed. $1,500 of these supplies remained at the end of 2011.
6. On July 1, 2011, Hullie & Oates issued a 9-month note receivable to Shanahan & Co. at an annual interest rate of 7%. Principle and interest will be paid at the end of the 9-months. The note was recorded in Notes Receivable and is the only note outstanding.
7. Depreciation for the year is based on the following:

• Straight line depreciation
• Store equipment – Assets were held for the entire year; Residual Value = $7,000; Service life is estimated to be 10 years.
• Office equipment – Assets were held for the entire year; Residual Value = $5,000; Service life is estimated to be 5 years.

8. Sales salaries of $6,200 and office salaries of $4,800 remained unpaid at 12/31/11.
9. On October 1, 2011, Hullie & Oates rented a portion of one store to Twist & Chase Co. The contract was for 10 months and Hullie & Oates required the 10 months of cash upfront on October 1st. The rent is being earned equally over the next 10 months. When cash was received, unearned rent was appropriately recorded.
10. The note payable was outstanding the entire year and a 5.5% interest rate exists on the note. No interest has been recorded for the year.
11. Based on past experience, Hullie & Oates calculates bad debt expense at 1% of net sales for the year.


THANK YOU! ANY HELP IS APPRECIATED

Here is the worksheet and what I have so far! I know this is a lot but any help would help a lot!

[pready]

1. This is correct. 9 months of insurance has expired.

2. This amount should be $24,000 because it says: equal amount services provided in year 1 and 2, so $48,000 divided by 2 equals your amount of services provided.

3. This one is tricky because it says the rent paid was expensed when paid. So you need to Debit Prepaid Rent and Credit Rent Expense for the amount or rent not used, which is 10 months. This moves the amount of rent not used to the Prepaid Rent account. The formula is: The amount of rent paid times 10 divided by 12 months equals the amount of rent that is still prepaid.

4. This is correct. The $3,850 of store supplies are expensed.

5. This is correct. The amount to be expend is the difference between the account balance and the physical balance.

6. There is no Note Receivable amount. You need to find out the annual interest rate amount, which will be your Note Receivable amount times the annual percentage rate of 7% which will be one year of interest receivable. Now you have to compute the amount of interest earned, which is from Jul 1 to Dec 31 or 6 months so take your one year of interest receivable times 6/12 to get your interest revenue amount.

7. The amount in the asset account is missing. The formula for straight line depreciation is: Cost of asset minus salvage value equals the depreciable base. The depreciable base divided by the number of years of useful life equals the depreciation amount per year.

8. This is correct as the amounts are given.

9. The amount of cash is received is not given. The amount of rent earned is 3 months of the 10 months actually received. So the formula is: The amount of rent received times 3 months divided by 10 months.

10. The amount of the Note Payable is not given. The formula is: The amount of Note Payable times your interest rate of 5.5% equals the amount of interest payable for the entire year.

11. The amount of net sales is not given. The formula is: Amount of net sales times 1% equals Bad Debt Expense.