Basics of Accounting: Adjusting Entries - How to Prepare the annual year-end adjusting entries.
Hillside Apartments, Inc., adjusts and closes its books each December 31. Assume the accounts for all prior years have been properly adjusted and closed. Following are some of the company’s account balances prior to adjustment on 2010 December 31: HILLSIDE APARTMENTS, INC. Partial Trial Balance 2010 December 31 Debits Credits Prepaid insurance $7,500 Supplies on hand 7,000 Buildings 255,000 Accumulated depreciation – Buildings $96,000 Unearned rent 2,700 Salaries expense 69,000 Rent revenue 277,500 The Prepaid Insurance account balance represents the remaining cost of a four-year insurance policy dated 2011 June 30, having a total premium of USD 12,000. The physical inventory of the office supply stockroom indicates that the supplies on hand cost USD 3,000. The building was originally acquired on 1994 January 1, at which time management estimated that the building would last 40 years and have a residual value of USD 15,000. Salaries earned since the last payday but unpaid at December 31 amount to USD 5,000. Interest earned but not collected on a savings account during the year amounts to USD 400. The Unearned Rent account arose through the prepayment of rent by a tenant in the building for 12 months beginning 2010 October 1. Prepare the annual year-end adjusting entries indicated by the additional data. Video Explanation to Accounting Principles: A Business Perspective First Global Text Edition, Volume 2 Managerial Accounting
Hillside Apartments, Inc., adjusts and closes its books each December 31. Assume the accounts for all prior years have been properly adjusted and closed. Following are some of the company’s account balances prior to adjustment on 2010 December 31: HILLSIDE APARTMENTS, INC. Partial Trial Balance 2010 December 31 Debits Credits Prepaid insurance $7,500 Supplies on hand 7,000 Buildings 255,000 Accumulated depreciation – Buildings $96,000 Unearned rent 2,700 Salaries expense 69,000 Rent revenue 277,500 The Prepaid Insurance account balance represents the remaining cost of a four-year insurance policy dated 2011 June 30, having a total premium of USD 12,000. The physical inventory of the office supply stockroom indicates that the supplies on hand cost USD 3,000. The building was originally acquired on 1994 January 1, at which time management estimated that the building would last 40 years and have a residual value of USD 15,000. Salaries earned since the last payday but unpaid at December 31 amount to USD 5,000. Interest earned but not collected on a savings account during the year amounts to USD 400. The Unearned Rent account arose through the prepayment of rent by a tenant in the building for 12 months beginning 2010 October 1. Prepare the annual year-end adjusting entries indicated by the additional data. Video Explanation to Accounting Principles: A Business Perspective First Global Text Edition, Volume 2 Managerial Accounting