Chapter 4 Exercises
1. Adjusting entries – You must complete Chapter 3 Exercises before
completing this Exercise.
Caddyshack Miniature Golf and Driving Range, Inc., has just completed its first
month of operations and it needs to prepare some basic financial statements in
order to apply for a bank loan. You have been asked to make the necessary
adjusting journal entries prior to the statements’ preparation. As of April 30, the
following information is provided:
• A physical count of the total supplies, including clubs, balls, etc., showed a
remaining total cost of $2,900 remaining.
• The advertisement in the local paper ran for the month of April.
• The new insurance policy was finalized.
• By April 30, a total of 75 coupons had been redeemed by customers. 2. Adjusting entries
On June30.2007, the end of the current fiscal year, the following information was
available for AJE Enterprise in order to prepare adjusting entries:
• Among the liabilities of the company is a mortgage note payable in the
amount of $240,000. At June 30, the accrued interest on this mortgage
amounted to $12,000.
• On Friday, July 2, the company, which is on a five (5)-day workweek and
pays employees weekly, will pay its regular salaried employees a total of
• On June 29, the company completed negotiations and signed a contract to
provide services to a new client at an annual rate of $3,600.
• The Prepaid Insurance account shows a balance of $720 represents the
premium for a one (1)-year policy purchased on April 1, 2007.
• A total of $12,000 depreciation has accumulated for the fiscal year.
• On June 1, the completed negotiations with another client and accepted a
payment of $21,000, representing one