Question

Prepare in journal entry form all adjusting and correcting journal entries based on the following information.  All information was provided to you as of 12/31/2018.  (Round all numbers to the nearest dollar).

(e) Per a physical count of office supplies, $4,430 of supplies remained at the end of 2018. The balance $4,800 in the office supplies account represents last years ending balance.  During the year, $28,000 of office supplies were purchased and immediately expensed.

(f) On November 1, 2018 Czar paid Ewald Advertising $12,800 for a four-month campaign of advertising services.  Equal services are provided each month.  

(g) Because of a new product line, Czar needed some temporary additional storage space so on January 1, 2018 they rented a unit for an annual rate of $13,600 and they paid the entire amount up front.

(h) The storage building was self-constructed this year by Czar.  The Company had their initial expenditure of $400,000 on January 1. They paid an additional $300,000 on May 1^st, $200,000 on August 1^st, and then the final payment of $120,000 on December 1^st when the building was completed and occupancy occurred. The company has decided to use the Straight-Line Method for depreciation.  The storage building is estimated to have a life of 40 years and a salvage value of $56,430. The company depreciates using partial years.

Answer 1

Date Account Title DR Cr 12/31/18 Office Expenses / Admin Expenses $370 To Office Supplies 370 ( being shortage of book balance and physical balance recorded) 12/31/18 Advertisement Expenses 6400 Prepaid Expenses 6400 To Cash 12800 ( paid to ewald advertising for advertising services) (12400/4 month * 2 month) 12/31/18 No entry needed for rent, since amount paid for whole year 12/31/18 Depreciation 2007 To Building 2007 ( Depreciation of building)

calculation of depreciatio: Book Value of Building as on 1st december =400000+300000+200000+120000=$1020000 Life of building= 40 years Salvage Value= $56430 Depreciation =(Cost- Salvage Value)/Life of asset = (1020000-56430)/40years = $24089.25 This depreciation for whole year, however in our case asset used for only one month during this year therefore depreciation for this year = 24089.25/12 month = $2007