For Each of the Following Independent Situations Prepare the Required

question 79

Essay

For each of the following independent situations prepare the required adjusting journal entry.Assume the economic events were correctly recorded initially.In all cases assume that the year-end is December 31^st.
A) The company paid $3,000 for a 12-month insurance policy on April 1^st.The entire amount was recorded as prepaid insurance at that time and no adjustments have been made since.
B) The company sold gift certificates totalling $8,000 in the Christmas season.By the end of December $1,500 had been redeemed.
C) The company owned equipment that originally cost $500,000 and was expected to last 20 years.They have owned it for 4 years.
D) The company lent $25,000 to a shareholder and is charging 4% interest on it.The loan has been outstanding all year.The company has been accruing the interest on it monthly although the shareholder is only going to pay the interest when they repay the loan.
E) Employees are paid on Fridays for that week's work.December 31^st was a Wednesday this year and the daily payroll is $200.

• A) The company paid $3,000 for a 12-month insurance policy on April 1^st.The entire amount was recorded as prepaid insurance at that time and no adjustments have been made since.
• B) The company sold gift certificates totalling $8,000 in the Christmas season.By the end of December $1,500 had been redeemed.
• C) The company owned equipment that originally cost $500,000 and was expected to last 20 years.They have owned it for 4 years.
• D) The company lent $25,000 to a shareholder and is charging 4% interest on it.The loan has been outstanding all year.The company has been accruing the interest on it monthly although the shareholder is only going to pay the interest when they repay the loan.
• E) Employees are paid on Fridays for that week's work.December 31^st was a Wednesday this year and the daily payroll is $200.

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Definitions:

Substantial Performance

A legal concept in contract law where a party has performed enough of their contractual obligation to warrant payment, albeit with minor deviations from the terms.

Nonconforming Goods

Products delivered under a sales contract that do not meet the specifications, quality, or quantity requirements agreed upon by the buyer and seller.

UCC

The Uniform Commercial Code (UCC) is a set of laws that provide legal standards and regulations for commercial transactions and business dealings.

Identified Goods

Goods explicitly designated or specified in a contract of sale, which sets them apart from other goods that may be part of a broader category.