Using T Accounts, Record the Required Adjusting Entries for the Year

question 90

Essay

Using T accounts, record the required adjusting entries for the year ended December 31 for Manning Equipment. Manning Equipment uses the periodic inventory system.
a-b.
A physical count of inventory revealed a balance of $63,222. The Merchandise Inventory account shows a balance of $72,589.
c.Equipment purchased on July 7 of the current year for $14,500 is expected to have a useful life of eight years, with a $3,750 trade-in value.All other equipment has been fully depreciated.The straight-line method is used.(Round to the nearest dollar.)
d.As of December 31, three days' salaries will be unpaid at $587 per day per employee.There are five employees.
e.The balance of Supplies account prior to adjustments is $3,125.The amount of supplies used is $1,965.
f.A prepaid order was received on September 20 for $6,298.At year end, $2,477 had been delivered to the customer.

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Definitions:

Present Value

The valuation of an expected income stream determined by discounting the future income to the present using a discount rate.

Income Stream

A regular flow of money from an investment, property, or other financial assets.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the real cost of borrowing or the real yield on savings.

Perfect Substitute

Two or more goods that can be used interchangeably with no loss of utility by the consumer.