ADJUSTING AND CLOSING ENTRIES - ACCRUALS

The transactions for the year 2000 for Anderson Architects have already been recorded. This problem
shows how to prepare adjusting entries for December 2000.

Dec. 31 A note payable of $6,000 has been outstanding since September 1, 2000. Under the
terms of the note, the note plus interest (12%) is to be paid on March 1, 2001. No interest
has been recorded on the note.

Dec. 31 Wages of $650 for December will be paid in January.

Dec. 31 Services were performed for a client for $800. The client has not been billed yet.

Dec. 31 Advertising costs of $105 for December will be paid in January.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Interest Expense 240
Interest Payable 240
Dec. 31 Wages Expense 650
Wages Payable 650
Dec. 31 Accounts Receivable 800
Service Revenue 800
Dec. 31 Advertising Expense 105
Accounts Payable 105

The transactions for the year 2000 for Comfort Furniture Co. have been recorded in the accounting
system. This assignment requires you to prepare adjusting entries for Comfort Furniture Co. for
December 2000.

Dec. 31 Wages owed but unpaid at the end of December were $5,000.

Dec. 31 The company signed a 12%, six-month note for $6,000 on November 1, 2000.
No interest has been recorded for November and December.

Dec. 31 Service provided to a customer for $350 has not been recorded.

Dec. 31 Advertising cost of $90 for December has not been recorded.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Wages Expense 5,000
Wages Payable 5,000
Dec. 31 Interest Expense 120
Interest Payable 120
Dec. 31 Accounts Receivable 350
Service Revenue 350
Dec. 31 Advertising Expense 90
Accounts Payable 90
The transactions for Conway Floor Covering Inc. for the year 2000 have been recorded in the accounting
system. This assignment requires you to record the adjusting entries for December 2000.

Dec. 31 Performed services for a client for $850. The customer will be billed in January.

Dec. 31 $15,000 was borrowed by signing a 10%, 2 year note on September 1, 2000.
Record the interest on the note.

Dec. 31 Employee wages of $950 for December will be paid in January.

Dec. 31 Advertising costs of $95 for December will be paid in January.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Accounts Receivable 850
Service Revenue 850
Dec. 31 Interest Expense 500
Interest Payable 500
Dec. 31 Wages Expense 950
Wages Payable 950
Dec. 31 Advertising Expense 95
Accounts Payable 95

Gym on Wheels provides gymnastics lessons at various daycare centers. The transactions for the year
2000 have been recorded in the accounting system. This assignment requires you to prepare adjusting
entries for December 2000.

Dec. 31 The note payable of $8,000 has been outstanding since July 1, 2000. Under the terms of
the note, the note plus interest (12%) is to be paid on July 1, 2001. No interest has been
recorded on the note.

Dec. 31 Instructors salaries of $2,000 for December will be paid in January.

Dec. 31 December fees of $160 will be collected in January.

Dec. 31 $85 will be paid in January for advertising in December.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Interest Expense 480
Interest Payable 480
Dec. 31 Salaries Expense 2,000
Salaries Payable 2,000
Dec. 31 Accounts Receivable 160
Service Revenue 160
Dec. 31 Advertising Expense 85
Accounts Payable 85
 The transactions for Borden Realty for the year 2000 have been recorded in the accounting system. This
assignment requires you to prepare adjusting entries for December 2000.

Dec. 31 Services provided to customers for $2,600 were unrecorded at the end of December.

Dec. 31 $115 will be paid in January for advertising in December.

Dec. 31 $1,080 of salaries earned by employees during December will be paid in January.

Dec. 31 The note payable of $12,000 has been outstanding since September 1, 2000. Under the
terms of the note, the note plus interest (10%) is to be paid on September 1, 2001. No
interest has been recorded on the note.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Accounts Receivable 2,600
Service Revenue 2,600
Dec. 31 Advertising Expense 115
Accounts Payable 115
Dec. 31 Salaries Expense 1,080
Salaries Payable 1,080
Dec. 31 Interest Expense 400
Interest Payable 400
 Homework Problem 3
Party Town Incorporated

The transactions for Party Town Inc. for the year 2000 have been recorded in the accounting system. This
assignment requires you to prepare adjusting entries for December 2000.

Dec. 31 A birthday party was arranged in December. The customer will pay $200 in January.

Dec. 31 Party Town Inc. borrowed $20,000 by signing a 12%, 2 year note on July 1, 2000.
Record the interest on the note.

Dec. 31 Employee wages of $750 for December will be paid in January.

Dec. 31 Advertising costs of $135 for December will be paid in January.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Accounts Receivable 200
Service Revenue 200
Dec. 31 Interest Expense 1,200
Interest Payable 1,200
Dec. 31 Salaries Expense 750
Salaries Payable 750
Dec. 31 Advertising Expense 135
Accounts Payable 135
The transactions for Star Interior Designs for the year 2000 have been recorded in the accounting system.
This assignment requires you to prepare adjusting entries for December 2000.

Dec. 31 Performed services for a client for $1,250. The customer will be billed in January.

Dec. 31 $10,000 was borrowed by signing a 12%, two year note on October 1, 2000.
Record the interest on the note.

Dec. 31 Employee wages of $1,150 for December will be paid in January.

Dec. 31 Advertising costs of $115 for December will be paid in January.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Accounts Receivable 1,250
Service Revenue 1,250
Dec. 31 Interest Expense 300
Interest Payable 300
Dec. 31 Salaries Expense 1,150
Salaries Payable 1,150
Dec. 31 Advertising Expense 115
Accounts Payable 115
 ADJUSTING AND CLOSING ENTRIES - DEFERRALS

The transactions for the year 2000 for Anderson Architects have already been recorded. This problem
shows how to prepare adjusting entries for Anderson Architects for December 2000.

Dec. 31 A computer was purchased on January 1, 1998 for $1,600. The useful life of the
computer is 4 years.

Dec. 31 On October 1, 2000, Anderson Architects had paid $4,800 as rent for a six month period.
This had been recorded as prepaid rent.

Dec. 31 The amount of supplies available at the end of December was $200. The amount of
supplies at the beginning of the period was $450. $250 of supplies were purchased
during the year.

Dec. 31 Furniture costing $3,000 was purchased on Jan 1, 1997. The useful life of the furniture is
estimated to be 5 years.

Dec. 31 Services were provided to a customer for $450. The cash was collected in advance on
November 28, 2000.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Depreciation Expense 400
Accumulated Depreciation 400
Dec. 31 Rent Expense 2,400
Prepaid Rent 2,400
Dec. 31 Supplies Expense 500
Supplies 500
Dec. 31 Depreciation Expense 600
Accumulated Depreciation 600
Dec. 31 Unearned Revenue 450
Service Revenue 450
The transactions for the year 2000 for Comfort Furniture Co. have been recorded in the accounting
system. This assignment requires you to prepare adjusting entries for Comfort Furniture for December
2000.

Dec. 31 The amount of supplies available at the end of December was $500. The amount of
supplies at the beginning of the period was $1,100.

Dec. 31 On January 1, 1998, Comfort Furniture purchased a computer for $2,400. The estimated
useful life of the computer is 4 years. Record the depreciation for the year 2000.

Dec. 31 On November 1, 2000, Comfort Furniture paid $2,400 as rent for a three month period.
This had been recorded as prepaid rent.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Supplies Expense 600
Supplies 600
Dec. 31 Depreciation Expense 600
Accumulated Depreciation 600
Dec. 31 Rent Expense 1,600
Prepaid Rent 1,600
The transactions for Conway Floor Covering Inc. for the year 2000 have been recorded in the accounting
system. This assignment requires you to prepare adjusting entries for December 2000.

Dec. 31 Services were provided to a customer for $550. The cash was collected in advance on
December 10, 2000.

Dec. 31 On September 1, 2000, Conway Floor Covering Inc. had paid $5,400 as rent for a six
month period. This had been recorded as prepaid rent.

Dec. 31 The amount of supplies available at the end of December was $400. The amount of
supplies at the beginning of the period was $260. $350 of supplies were purchased
during the year.

Dec. 31 A computer was purchased on January 1, 1998, for $2,400. The useful life of the
computer is 4 years.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Unearned Revenue 550
Service Revenue 550
Dec. 31 Rent Expense 3,600
Prepaid Rent 3,600
Dec. 31 Supplies Expense 210
Supplies 210
Dec. 31 Depreciation Expense 600
Accumulated Depreciation 600
Gym on Wheels provides gymnastics lessons at various daycare centers. The transactions for the year
2000 have been recorded in the accounting system. This assignment requires you to prepare adjusting
entries for December 2000.

Dec. 31 A number of children registered on December 1 and paid the month's fees in advance.
These fees totaled $500 and unearned revenue was credited when the fees were paid.

Dec. 31 The amount of supplies available at the end of December was $500. The amount of
supplies at the beginning of the period was $1,500.

Dec. 31 On January 1, 1998, Gym on Wheels had purchased a computer for $2,000. The
estimated useful life of the computer is 4 years. Record the depreciation for 2000.

Dec. 31 On December 1, 2000, Gym on Wheels had paid $2,400 as rent for a three month period.
This had been recorded as prepaid rent.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Unearned Revenue 500
Service Revenue 500
Dec. 31 Supplies Expense 1,000
Supplies 1,000
Dec. 31 Depreciation Expense 500
Accumulated Depreciation 500
Dec. 31 Rent Expense 800
Prepaid Rent 800
The transactions for Borden Realty for the year 2000 have been recorded in the accounting system. This
assignment requires you to prepare adjusting entries for December 2000.

Dec. 31 A computer was purchased for $1,600 on January 1, 1998. The useful life of the
computer is 4 years.

Dec. 31 Furniture costing $4,800 was purchased on January 1, 2000. The useful life of the
furniture is estimated to be 10 years and the salvage value is $800.

Dec. 31 The amount of supplies available at the end of December was $850. The amount of
supplies at the beginning of the period was $1,000. $1,850 of supplies were purchased
during 2000.

Dec. 31 On September 1, 2000, Borden Realty had paid $6,600 as rent for a six month period.
This had been recorded as prepaid rent.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Depreciation Expense 400
Accumulated Depreciation 400
Dec. 31 Depreciation Expense 400
Accumulated Depreciation 400
Dec. 31 Supplies Expense 2,000
Supplies 2,000
Dec. 31 Rent Expense 4,400
Prepaid Rent 4,400
The transactions for Party Town Inc. for the year 2000 have been recorded in the accounting system.
This assignment requires you to prepare adjusting entries for December 2000.

Dec. 31 Depreciation on the building owned by Party Town Inc. is estimated to be $12,500 for the
period.

Dec. 31 Party Town Inc. purchased furniture for $4,200 on January 1, 1997. The estimated useful
life of the furniture is seven years. Record the depreciation for 2000.

Dec. 31 Excess space in the building was rented to another business on October 1, 2000, and six
months' rent of $7,200 was collected in advance.

Dec. 31 The amount of party supplies available at the end of December was $150. The amount of
supplies at the beginning of the period was $200. $550 of supplies were purchased
during 2000.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Depreciation Expense 12,500
Accumulated Depreciation 12,500
Dec. 31 Depreciation Expense 600
Accumulated Depreciation 600
Dec. 31 Unearned Rent Revenue 3,600
Rent Revenue 3,600
Dec. 31 Supplies Expense 600
Supplies 600
The transactions for Star Interior Designs for the year 2000 have been recorded in the accounting system.
This assignment requires you to record the adjusting entries for December 2000.

Dec. 31 Depreciation on a truck owned by Star Interior Designs is estimated to be $1,250 for the
period.

Dec. 31 Furniture costing $3,600 was purchased on January 1, 1997. The estimated useful life of
the furniture is six years. Record the depreciation for 2000.

Dec. 31 Six months' rent of $7,200 was paid in advance on October 1, 2000.

Dec. 31 The amount of supplies available at the end of December was $250. The amount of
supplies at the beginning of the period was $200. $550 of supplies were purchased
during the year.

DATE ACCOUNT DEBIT CREDIT

2000
Dec. 31 Depreciation Expense 1,250
Accumulated Depreciation 1,250
Dec. 31 Depreciation Expense 600
Accumulated Depreciation 600
Dec. 31 Rent Expense 3,600
Prepaid Rent 3,600
Dec. 31 Supplies Expense 500
Supplies 500