Question

Analyze the yearend adjustments; update the T-accounts and the final trail balance.

Part 2 December Adjustments:

1. Ahern purchased a building for $3,500,000. They purchased it using a mortgage for the full amount. There other properties were fully depreciated. The building had a residual value of $500,000 and an expected life of 75 years. Record the building purchase and this year’s depreciation.

2. The equipment has a residual value of $17,710 and a useful life of 20 years. Record the depreciation for this year.

3. Calculate the interest due for the $600,000 note at % on December 1. Record the year-end interest.

4. The current portion of the new mortgage due is $350,000. Please make the appropriate entries.

5. During the last pay period of the year, a payroll of 5 days was earned with 5 days left in the New Year. 5 workers made $25 an hour for 8 hrs a day. 2 workers worked 4 extra hours on 3 days at time and a half record the entries for December.

6. $100 of unearned revenue was earned by year-end.

7. An insurance policy was purchased on September 1, 2017. For one year in the amount of $6000. Record the entry for December’s expired insurance. It is paid monthly.

8. The ending balance of supplies was $8000.

9. Income tax was calculated at 20%.

Answer 1

As per the Multiple Questions given above please see the Journal entries which would help you to understand the T accounts better.

1. Building A/c .. Dr. 3,500,000

    To Loan A/c             3,500,000

Depreciation Expense A/c .. Dr. 40,000

To Accumulated Depreciation A/c 40,000

2. The equipment has a residual value given and a useful life is given but it does not say the original price to calculate the depreciation expenses for the year. More Information needed.

3. The calculation of Interest rate of a note cannot be done without the interest rate. More Information needed.

4. It says the current portion of the new mortgage is due at a certain amount. More Information needed.

5. Salary A/c ..Dr. 1700

To Salary Outstanding A/c 1700

6. Unearned Revenue A/c .. Dr. 100

To Income A/c                                100

7. Insurance Expenses A/c Dr. 2,000

To Prepaid Insurance A/c                2,000

8. Ending Balance of Supplies was 8000. More Information needed.

9. Income Tax calculation. More Information needed.