Read the Description of Following Adjustments That Are Required at the End

question 31

Essay

Read the description of following adjustments that are required at the end of the accounting period for Drake Consulting Services. Determine the account and amount to be debited and the account and amount to be credited.
A. Prepaid rent for the year on January 1, 2013. Rent expired during the month of January 2013, $7,000. Record the adjustment on January 31, 2013.
B. Purchased supplies for $1,600 on January 1, 2013. Inventory of supplies was $600 on January 30, 2013. Record the adjustment for the amount of the supplies that were used during the month of January 2013.
C. Depreciation is computed using the straight-line method. Equipment purchased on January 1, 2013, for $36,000 has an estimated useful life of 5 years with no salvage value. Record the adjustment on January 31, 2013.
D. Signed a 12-month contract for $2,400 of prepaid advertising on January 1, 2013. Record the adjustment for the amount of the advertising contract that expired during the month of January 2013.

---

Definitions:

Prospector Strategy

A business strategy that focuses on innovation, exploring new markets, and seeking out new opportunities, often characterized by a willingness to take risks.

Innovation

The process of creating new ideas, products, or methods, which bring about significant positive change or improvement.

Retrenchment

The process of reducing staff or costs within an organization as a strategy to improve its financial position.

Divestiture

Divestiture sells off parts of the organisation to focus attention and resources on core business areas.