End-Of-Period Adjustments West Laboratory Adjusts and Closes Its Accounts at the End

question 119

Essay

End-of-period adjustments
West Laboratory adjusts and closes its accounts at the end of each month. The trial balance at September 30, 2010, before adjustments, is as follows:

The following information relates to month end adjustments:
(a) Office supplies on hand September 30 amounted to $500.
(b) The useful life of the medical equipment was estimated to be 20 years with no residual
value.
(c) Many patients pay in advance for major medical procedures. Fees of $6,000 were earned during the month by performing procedures on patients who had paid in advance.
(d) Salaries earned by employees during the month but not yet recorded amounted to $2,300.
(e) On September 1, West Laboratory had moved and paid 2 month's rent in advance.
(f) Medical procedures performed during the month but not yet billed or recorded amounted to $4,600.
Prepare the adjusting entries required at September 30.

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Definitions:

Wage Base Limits

The maximum amount of income that is subject to social security or other payroll taxes within a tax year.

Payroll Tax Expense

The employer’s expense associated with the employment taxes (Social Security, Medicare, and unemployment taxes) on the wages paid to employees.

Federal Unemployment Taxes

Taxes paid by employers based on employee wages/salaries to fund unemployment compensation to workers who have lost their jobs.

Medical Insurance

Health care insurance for which premiums may be paid through a deduction from an employee’s paycheck.