The adjusting journal entries are below each transaction listed. All would be dated 12/31/X5
1. Accrued interest earned but not yet collected on the investments account (account #150) balance has been calculated to be $4,000.
Debit Interest Receivable, Credit Interest Revenue for $4,000
2. Accrued interest on the note receivable that originated on December 1 (to Woodson Corp.) needs to be calculated and recorded. Lent $50,000 in cash to one of its suppliers (Check #501 payable to Woodson Corp). The supplier signed a 1-year, 12% promissory note with a face value of $50,000. The note’s face value plus interest is due on 12/1/X6.
interest = 50,000 x 12% x (31/360) You use 31 days for the time between origination and year end.
= $516.67 approximately
Debit Interest Receivable, Credit Interest Revenue for $516.67
3. Wolfpack uses the percentage of accounts receivable method to estimate bad debts. Wolfpack estimates that 3% of its ending gross receivable balance is uncollectible. The amount is $11,760.
allowance for doubtful accounts (or allowance for bad debts) = 11,760 x 3%
= $352.80
Debit Bad debt expense, Credit allowance for doubtful accounts for $352.80
4. A physical count shows the ending inventory balance at 12/31/X5 should be $100,000.
I'm not sure how to answer this one. You need beginning balance, or book balance, or inventory used or sold. More information is needed to make the correct adjusting entry.
5. An end of year analysis of its insurance policies shows that the balance still prepaid on December 31, 20X5 should be $2,000.
Same as number 4. What was the original balance? You need the amount of prepaid already used for the journal entry. The adjusting entry is:
Debit insurance expense, Credit prepaid insurance for whatever amount was used (not what's left)
6. An end of year analysis of its rental agreements (as a lessee) shows that the balance still prepaid on December 31, 20X5 should be $4,000.
Same as number 5. What was the original balance? You need the amount of prepaid already used for the journal entry. The adjusting entry is:
Debit rent expense, Credit prepaid rent for whatever amount was used (not what's left)
7. Depreciation expense on the buildings is $35,000 for the year.
Debit depreciation expense-buildings, credit accumulated depreciation-buildings for 35,000
8. Depreciation expense on the equipment is $20,000 for the year.
Debit depreciation expense-equipment, credit accumulated depreciation-equipment for 20,000
9. Amortization on the patent is $25,000 for the year.
Debit amortization expense-equipment, credit patent for 25,000
10. Supplies on hand at 12/31/X5 total $3,000.
I'm not sure how to answer this one. You need beginning balance, or book balance, or supplies used. More information is needed for the amount of the correct adjusting entry. The adjusting entry is:
Debit supplies expense, Credit supplies for whatever amount was used (not what's left)
11. Accrued interest on all notes payable for the month of December has been calculated to be $4,650. This interest will be paid in 20X6.
Debit Interest expense, Credit Interest payable for $4,650
12. Wolfpack accrues a $5,000 bonus to its manager for benchmarks the company met during 20X5. The bonus will be paid in January of 20X6.
Debit salaries or bonus expense, Credit salaries or bonus payable for $5,000
13. Referring to the fourth transaction on December 1, Wolfpack makes the necessary year- end adjustment to recognize rent revenue. It received $9,000 cash for a three-month rental of equipment.
Rent revenue earned = 9000 / 3 months
= 3000 earned during December
Debit unearned rent revenue, credit rent revenue for $3,000
.
