Question

Prepare journal entries to adjust the books of McGarrett Corp. at December 31,

2013.

-Purchased Machine B used in the factory for $450,000 on July 1, 2010. Machine B has an estimated useful life of 12 years and a residual value of $30,000. McGarrett uses straight-line depreciation.

-Sales for 2013 amounted to $4,000,000, including $600,000 of sales on credit. Bad debt losses are estimated based on actual experience to be .25% of credit sales.

-The dollar value of office supplies inventory at the beginning of 2013 equaled $600. During 2013, office supplies costing $8,800 were purchased. This amount was debited to office supplies expense. The dollar value of the ending inventory was determined to be $400. The January 1 balance of $600 still appears as the balance in the office supplies inventory account.

-On July 1, 2013, the company paid a three-year insurance premium in the amount of $2,160. This amount was debited to insurance expense.

-On October 1, 2013, the company paid rent on some leased office space. The payment of $7,200 cash was for the following six months. The $7,200 payment was debited to rent expense

Can you add side notes for each journal entry please!!

Answer 1

Date	Account Titles & Explanation	Debit	Credit
31-Dec-13	Depreciation Expense	35000
	To Accumulated Depreciation		35000
	(Being Depreciation on machinery has been recorded)
	Deprecaition expenses   = ($450,000-$30,000) /12 =$35000
31-Dec-13	Bad debt Expense A/c	1500
	To Allowance for Doughtful accounts		1500
	(Being Estimated bad debts has been recorded)
	Bad debts Expenses =$600,000*0.25% =$1500
31-Dec-13	Office Supplies Expense A/c	200
	To office supplies Invenory A/c		200
	(Being office supplies used from Opening balance has been recorded has expenses $600-$400=$200)
31-Dec-13	Prepared Insurance	1800
	To Insurance Expense A/c		1800
	(Being unexpired Insurance has been transferred to prepaid Insurance $2160*2.5 Years /3)
31-Dec-13	Prepaid rent A/c	3600
	To Rent Expense A/c		3600
	(Being 3 Months rent Transferred to prepared $7200*3/6)