ACCT 1201 Chapter 4: Chapter 4 - Activity 4.docx
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Assignment: Adjustments and the Ten-Column Worksheet
Part 1
The inventory account of Olympic Sports Wear is as follows.
1. Merchandise inventory account balance $75,000
2. Physical inventory $71,500
Instruction:
Prepare the adjustment journal entry.
General Journal | ||||
Date | Description | Post. Ref. | Debit | Credit |
Part 2 (6 points)
The information relating to the inventory of Olympic Sports Wear is as follows:
1. Merchandise inventory accounts balance $75,000
2. Physical inventory $98,200
Instruction:
Prepare the adjustment journal entry.
General Journal | ||||
Date | Description | Post. Ref. | Debit | Credit |
Part 3 (6 points)
Olympic Sports Wear furnishes the following information:
1. On January 1, 2005, the supplies account has $7,200 balance
2. During the year, supplies are purchased for $5,000
3. On December 31, 2005, the supplies account has a closing balance of $2,200.
Instruction:
Prepare the adjusting journal entry.
General Journal | ||||
Date | Description | Post. Ref. | Debit | Credit |
Part 4 (6 points)
Olympic Sports Wear furnishes the following information:
1. An insurance policy is purchased on December 1, 2005 for three months (December through February). The premium amount for the quarterly period is $1,500.
2. The clerk debited the Prepaid Insurance account for $1500.
3. At the end of the account year (on March 31, 2006), only one month cost $500 has expired. The value of the unexpired insurance is $1,000.
Instruction:
Prepare the adjusting journal entries for the Prepaid Insurance Account.
General Journal | ||||
Date | Description | Post. Ref. | Debit | Credit |
Part 5 (6 points)
Olympic Sports Wear estimates its Annual Federal Income tax as $10,000. It has paid the tax in four installments of $2,500 each. However, at the end of the year, the actual tax amount is $11,200.
Therefore, the company needs to pay $1,200 to the government.
Instruction:
Prepare the adjusting journal entry.
General Journal | ||||
Date | Description | Post. Ref. | Debit | Credit |
Following are three separate transactions that pertain to prepaid items. Evaluate each item and prepare the journal entries that would be needed for the initial recording and subsequent end-of-20X3 adjusting entry. Assume the company uses the balance sheet approach, and the initial recording is to an asset account. The company has a calendar year-end and does not make any adjusting entries prior to December 31.
(1) | The company purchased an 18-month insurance policy for $18,000 on June 1, 20X3. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) | The company started 20X3 with $20,000 in supplies (this was previously recorded, and you do not need to make an entry for the beginning balance), purchased $30,000 in supplies during the year, and found only $13,000 in supplies on hand at the end of 20X3. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) | The company paid $2,500 to rent a truck. The rental period began on December 16, 20X3, and ends on February 14, 20X4.
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