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PART A: Nittany Lions Corporation adjusts itsaccounts only at year-end. The following information is availableas a source for preparing adjusting entries at December 31,2015.

On November 1, 2015, the company borrowed $120,000 for one yearat 9% interest and recorded a full yearof accrued interest expense. Interest is payable at maturity.

On October 1, 2015, Nittany Lions collected seven month’s rentin the amount of $10,500 in advance from the renter. At that date,the company debited Cash and credited Unearned Rent Revenue for$10,500.

The Supplies Inventory account had a $4,500 balance at thebeginning of the year (January 1, 2015). During the year, $6,000 ofsupplies were acquired, with the Supplies Expense account debitedat the time of purchase. The supplies count at the end of the year(December 31, 2015) showed $5,000 of supplies is still on hand.

The company owes 6-month property taxes of $1,500 on land ownedfor 2015. The taxes will be paid when they are billed in February2016. No related expense has been recorded.

Required:

For each of the above numbered items, prepare the necessaryadjusting journal entry. If no adjusting entry is required, explainwhy. Put the adjusting journal entries in the worksheet titled“Part A Answers to Part A.”

If Nittany Lions failed to prepare necessaryadjusting entries like you did in Requirement A, indicate theeffect that each item will have on the company’s financialstatements for the year ended December 31, 2015. UseO for overstated, U forunderstated, and NE for no effect. Organize youranswer in tabular form, using the column headings shown below andprovided in the worksheet titled “Part A Answers to Part B.”

Example 0: At year end, employees earned $4,000in wages which will be paid on the next payroll date in January2016. The adjusting journal entry will be:

Rent Expense (+E, -NI, -R/E,-SE) 4,000

Salaries Payable(+L) 4,000

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Beverley Smith
Beverley SmithLv2
28 Sep 2019

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Brokeback Towing Company is at the end of its accounting year,December 31, 2015. The following data that must be considered weredeveloped from the company’s records and related documents: a. OnJuly 1, 2015, a two-year insurance premium on equipment in theamount of $792 was paid and debited in full to Prepaid Insurance onthat date. Coverage began on July 1. b. At the end of 2015, theunadjusted balance in the Supplies account was $1,000. A physicalcount of supplies on December 31, 2015, indicated supplies costing$380 were still on hand. c. On December 31, 2015, YY’s Garagecompleted repairs on one of Brokeback’s trucks at a cost of $880.The amount is not yet recorded. It will be paid during January2016. d. On December 31, 2015, the company completed a contract foran out-of-state company for $8,350 payable by the customer within30 days. No cash has been collected and no journal entry has beenmade for this transaction. e. On July 1, 2015, the companypurchased a new hauling van. Depreciation for July–December 2015,estimated to total $3,150, has not been recorded. f. As of December31, the company owes interest of $580 on a bank loan taken out onOctober 1, 2015. The interest will be paid when the loan is repaidon September 30, 2016. No interest has been recorded yet. g. Assumethe income after the preceding adjustments but before income taxeswas $38,000. The company’s federal income tax rate is 25%. Computeand record income tax expense. Required: 1. Give the adjustingjournal entry required for each item at December 31, 2015. (If noentry is required for a transaction/event, select "No Journal EntryRequired" in the first account field.

Terrific Temps fills temporary employment positions for localbusinesses. Some businesses pay in advance for services; others arebilled after services have been performed. Advanced payments arecredited to an account entitled Unearned Fees. Adjusting entriesare performed on a monthly basis. An unadjusted trial balance datedDecember 31, 2015, follows. (Bear in mind that adjusting entrieshave already been made for the first 11 months of 2015, but not forDecember.) TERRIFIC TEMPS UNADJUSTED TRIAL BALANCE DECEMBER 31,2015 Cash $ 27,020 Accounts receivable 59,200 Unexpired insurance900 Prepaid rent 3,000 Office supplies 600 Equipment 60,000Accumulated depreciation: equipment $ 29,500 Accounts payable 4,180Notes payable 12,000 Interest payable 320 Unearned fees 6,000Income taxes payable 4,000 Unearned revenue 20,000 Retainedearnings 49,000 Capital stock 25,000 Dividends 3,000 Fees earned75,000 Travel expense 5,000 Insurance expense 2,980 Rent expense9,900 Office supplies expense 780 Utilities expense 4,800Depreciation expense: equipment 5,500 Salaries expense 30,000Interest expense 320 Income taxes expense 12,000 $ 225,000 $225,000 Other Data 1. Accrued but unrecorded fees earned as ofDecember 31, 2015, amount to $1,500. 2. Records show that $2,500 ofcash receipts originally recorded as unearned fees had been earnedas of December 31. 3. The company purchased a six-month insurancepolicy on September 1, 2015, for $1,800. 4. On December 1, 2015,the company paid its rent through February 28, 2016. 5. Officesupplies on hand at December 31 amount to $400. 6. All equipmentwas purchased when the business first formed. The estimated life ofthe equipment at that time was 10 years (or 120 months). 7. OnAugust 1, 2015, the company borrowed $12,000 by signing asix-month, 8 percent note payable. The entire note, plus sixmonths' accrued interest, is due on February 1, 2016. 8. Accruedbut unrecorded salaries at December 31 amount to $2,700. 9.Estimated income taxes expense for the entire year totals $15,000.Taxes are due in the first quarter of 2016. Instructions a. Foreach of the numbered paragraphs, prepare the necessary adjustingentry. (If no entry is required for a transaction/event, select "Nojournal entry required" in the first account field.

part 2.b. Determine that amount at which eachof the following accounts will be reported in the company’s 2015income statement

1.fees earned

2.travel expense

3.insurance expense

4.rent expense

5.office supplies expense

6.utilities expense

7.depreciation expense:equipment

8.interest expense

9.income taxes expense

Terrific Temps fills temporary employment positions for localbusinesses. Some businesses pay in
advance for services; others are billed after services have beenperformed. Advanced payments are
credited to an account entitled Unearned Fees. Adjusting entriesare performed on a monthly basis.
An unadjusted trial balance dated December 31, 2015, follows. (Bearin mind that adjusting entries
have already been made for the first 11 months of 2015, but not forDecember.)


TERRIFIC TEMPS
UNADJUSTED TRIAL BALANCE
DECEMBER 31, 2015
Cash $ 27,020
Accounts receivable 59,200
Unexpired insurance 900
Prepaid rent 3,000
Office supplies 600
Equipment 60,000
Accumulated depreciation: equipment $ 29,500
Accounts payable 4,180
Notes payable 12,000
Interest payable 320
Unearned fees 6,000
Income taxes payable 4,000
Unearned revenue 20,000
Retained earnings 49,000
Capital stock 25,000
Dividends 3,000
Feesearned 75,000
Travel expense 5,000
Insurance expense 2,980
Rentexpense 9,900
Office supplies expense 780
Utilities expense 4,800
Depreciation expense: equipment 5,500
Salaries expense 30,000
Interest expense 320
Income taxes expense 12,000
$ 225,000 $ 225,000

Other Data
1. Accrued butunrecorded fees earned as of December 31, 2015, amount to$1,500.
2. Records showthat $2,500 of cash receipts originally recorded as unearned feeshad been earned as of December 31.
3. The companypurchased a six-month insurance policy on September 1, 2015, for$1,800.
4. On December 1,2015, the company paid its rent through February 28, 2016.
5. Office supplieson hand at December 31 amount to $400.
6.

All equipment was purchased when the business first formed. Theestimated life of the equipment at that time was 10 years (or 120months).
7.

On August 1, 2015, the company borrowed $12,000 by signing asix-month, 8 percent note payable. The entire note, plus sixmonths' accrued interest, is due on February 1, 2016.
8. Accrued butunrecorded salaries at December 31 amount to $2,700.
9. Estimated incometaxes expense for the entire year totals $15,000. Taxesare due in the first quarter of 2016.

Instructions
a. For each of thenumbered paragraphs, prepare the necessary adjusting entry.(If no entry is required for a transaction/event, select"No journal entry required" in the first accountfield.)

Journal Entry Worksheet

Record the accrued but uncollected fees earned.

Record fees earned as of December 31st.

Record the December insurance expense.

Record the December rent expense.

Record the offices supplies used in December.

Record the December depreciation expense.

Record the interest accrued in December.

Record the salaries accrued in December.

Record the income taxes accrued in December.

Date GeneralJournal Debit Credit
Dec. 31

*Enter debits before credits

1. Fees earned
2. Travel expense
3. Insurance expense
4. Rent expense
5. Office supplies expense
6. Utilities expense
7. Depreciation expense: equipment
8. Interest expense
9. Salaries expense
10. Income taxes expense
. The unadjusted trial balance reportsdividends of $3,000. As of December 31, 2015, have these dividendsbeen paid?
Yes
No

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