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A partial trial balance of Julie Hartsack Corporation is as follows on December 31, 2018. Dr....

A partial trial balance of Julie Hartsack Corporation is as follows on December 31, 2018. Dr. Cr. Supplies $2,700 Salaries and wages payable $1,500 Interest Receivable 5,100 Prepaid Insurance 90,000 Unearned Rent 0 Interest Payable 15,000 Additional adjusting data: 1. A physical count of supplies on hand on December 31, 2018, totaled $1,100. 2. Through oversight, the Salaries and Wages Payable account was not changed during 2018. Accrued salaries and wages on December 31, 2018, amounted to $4,400. 3. The Interest Receivable account was also left unchanged during 2018. Accrued interest on investments amounts to $4,350 on December 31, 2018. 4. The unexpired portions of the insurance policies totaled $65,000 as of December 31, 2018. 5. $28,000 was received on January 1, 2018, for the rent of a building for both 2018 and 2019. The entire amount was credited to rent revenue. 6. Depreciation on equipment for the year was erroneously recorded as $5,000 rather than the correct figure of $50,000. 7. A further review of depreciation calculations of prior years revealed that equipment depreciation of $7,200 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment.Pass the necessary adjusting entries for the following taking into account income tax effects (40% tax rate) and assuming that the books have been closed. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) 1. Depreciation on equipment for the year was erroneously recorded as $5,000 rather than the correct figure of $50,000. 2. A further review of depreciation calculations of prior years revealed that equipment depreciation of $7,200 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment.

Solutions

Expert Solution

a The following adjustment entries are passed if the books are not closed
Date Account Title Debit-$ Credit-$
31-Dec-18
1 Supplies Expenses(2700-1100) 1600
Supplies 1600
2 Salaries and Wages Expenses(4400-1500) 2900
Salaries and Wages Payable 2900
3 Interest Revenue(5100-4350) 750
Interest Receivable 750
4 Insurance Expense(90000-65000) 25000
Prepaid Insurance 25000
5 Rent Revenue(28000/2) 14000
Unearned Rent Revenue 14000
6 Depreciation Expenses(50000-5000) 45000
Accumulated Depreciation-Equipment 45000
7 Accumulated Depreciation-Equipment 7200
Prior Period Expenses 7200
b
The following adjustments entries are passed if the books are closed
Date Account Title Debit-$ Credit-$
31-Dec-18
1 Retained Earnings 1600
Supplies 1600
2 Retained Earnings 2900
Salaries and Wages Payable 2900
3 Retained Earnings 750
Interest Receivable 750
4 Retained Earnings 25000
Prepaid Insurance 25000
5 Retained Earnings 14000
Unearned Rent Revenue 14000
6 Retained Earnings 45000
Accumulated Depreciation-Equipment 45000
7 Retained Earnings 7200
Accumulated Depreciation-Equipment 7200
c
Date Account Title Debit-$ Credit-$
6 Income Tax Refundable(45000*40%) 18000
Retained Earnings 18000
7 Income Tax Refundable(7200*40%) 2880
Retained Earnings 2880

ekkarill92 answered 1 month ago
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