For Each of the Following Independent Situations Prepare the Adjusting

question 24

Essay

For each of the following independent situations prepare the adjusting entry that would be required at year-end.Assume a December 31 year-end for all cases.
A) On September 1 a company issued at par a $500,000 8% semi-annual coupon bond, interest payable on
February 28 and August 31.
B) A company leases retail space in a mall.The lease calls for monthly payments to be made on the first of the month of $5,000, plus 1% of sales to be paid quarterly 15 days after the end of the quarter.The sales for the last quarter of the year were $375,400.
C) A company sells a product with a six-month warranty.Warranty costs are estimated to be 1.5% of sales.The company has not recorded their estimate for the expense on the current year's sales of $2,500,000 but has paid
$27,000 in warranty claims during the year.
D) A company estimated its income tax expense to be $525,000 for the year.To date they have made instalment payments of $400,000.
E) A company has a 5-year term loan of $250,000 outstanding with a bank.Interest is charged at 5% and paid on the first day of each quarter.The annual payment of $50,000 is due January 1.

• A) On September 1 a company issued at par a $500,000 8% semi-annual coupon bond, interest payable on
• February 28 and August 31.
• B) A company leases retail space in a mall.The lease calls for monthly payments to be made on the first of the month of $5,000, plus 1% of sales to be paid quarterly 15 days after the end of the quarter.The sales for the last quarter of the year were $375,400.
• C) A company sells a product with a six-month warranty.Warranty costs are estimated to be 1.5% of sales.The company has not recorded their estimate for the expense on the current year's sales of $2,500,000 but has paid
• $27,000 in warranty claims during the year.
• D) A company estimated its income tax expense to be $525,000 for the year.To date they have made instalment payments of $400,000.
• E) A company has a 5-year term loan of $250,000 outstanding with a bank.Interest is charged at 5% and paid on the first day of each quarter.The annual payment of $50,000 is due January 1.

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