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  1. Sample Problem Chapter 13

  2. Journalizing adjusting and reversing entries. • The data below concerns adjustments to be made at Vaughn Company. • INSTRUCTIONS • Record the adjusting entries in the general journal as of December 31, 2007. Use 25 as the first journal page number. Include descriptions. • ADJUSTMENTS • On October 1, 2007, the firm signed a lease for a warehouse and paid rent of $17,700 in advance for a six-month period. • On December 31, 2007, an inventory of supplies showed that items costing $1,840 were on hand. The balance of the Supplies account was $11,120. • A depreciation schedule for the firm’s equipment shows that a total of $8,200 should be charged off as depreciation for 2007. • On December 31, 2007, the firm owed salaries of $4,400 that will not be paid until January 2008. • On December 31, 2007, the firm owed the employer’s social security (6.2 percent) and Medicare (1.45 percent) taxes on all accrued salaries. • On September 1, 2007, the firm received a five-month, 8 percent note for $4,500 from a customer with an overdue balance. • Analyze: After the adjusting entries have been posted, what is the balance of the Prepaid Rent account on January 1, 2008?

  3. a) On October 1, 2007, the firm signed a lease for a warehouse and paid rent of $17,700 in advance for a six month period. Adjusting entry: Rent expense 8,850 Prepaid rent 8,850 17,700/6 = 2,950 2,950 x 3 = 8,850

  4. b) On December 31, 2007, an inventory of supplies showed that items costing $1,840 were on hand. The balance of the Supplies account was $11,120 Adjusting entry: Supplies expense 9,280 Supplies 9,280 11,120 – 1,840 = 9,280

  5. c) A depreciation schedule for the firm’s equipment shows that a total of $8,200 should be charged off as depreciation for 2007 Adjusting entry: Depreciation expense – equipment 8,200 Accumulated depreciation – equipment 8,200

  6. d) On December 31, 2007, the firm owed salaries of $4,400 that will not be paid until January, 2008 Adjusting entry: Salaries expense 4,400 Salaries payable 4,400

  7. e) On December 31, 2007, the firm owed the employer’s social security (6.2%) and Medicare (1.45%) taxes on all accrued salaries. Adjusting entry: Payroll tax expense 336.60 Social Security tax payable 272.80 Medicare tax payable 63.80

  8. f) On September 1, 2007, the firm received a five month, 8% note for $4,500 from a customer with an overdue balance. Adjusting entry: Interest receivable 120 Interest income 120 4500 x 8% x 4/12 = 120

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