Question

Bourque Corporation began operations on January 2nd. Its end year is December 31st, and it adjusts its accounts annually. Selected transactions for the current year follow:

1. On January 2, purchased supplies for $2,100 cash. A physical count at December 31 revealed that $550 of supplies were still on hand.

2. Purchased equipment for $20,000 cash on March 1. The equipment us estimated to have a useful life of 5 years and the company uses straight-line depreciation.

3. Purchased a one-year, $4,200 insurance policy for cash on June 1. The policy came into effect on that date.

4. On November 15, received a $1,275 advance cash payment from three clients for services to be performed in the future. As at December 31, work had been completed for two of the clients ($425 each)

5. On December 15, the company paid $2,500 rent in advance for the next month (January)

a) For each of the above situations, prepare the journal entry for the original transaction

b) For each of the above situations, prepare any adjusting journal entry required at December 31

Answer 1