Question

The following information is available for Gulf Corp. on December 31 for the year just ended.

1. The estimated yearly depreciation on the building is $950.
2. This year's advertising bill for $12,000 is unrecorded and unpaid.
3. Unpaid and unrecorded salaries at year-end totalled $47,500.
4. The estimated yearly depreciation on the furniture is $900.
5. $600 of property taxes have accrued and are unrecorded.
6. A review of the $4,400 unadjusted balance in the supplies account shows a balance on hand at the end of the year of $3,750.
7. Of the consulting fees Gulf Corp. received in advance, $4,000 has been earned.
8. A review of the $12,000 unadjusted balance in the prepaid insurance account shows a remaining balance of $5,500 at the end of the year.
9. The estimated yearly depreciation on the equipment is $200.
10. A review of the $21,500 unadjusted balance in the prepaid rent account shows a remaining balance of $18,000 at the end of the year.

Prepare the required adjusting entries at December 31, 2014.
Enter the transaction letter as the description when entering the transactions in the journal. Dates must be entered in the format dd/mmm (i.e., January 15 would be 15/Jan). For each journal entry, indicate how each account affects the balance sheet (Assets, Liabilities, Equity). Use + for increase and - for decrease. For example, if an account decreases equity, choose '-Equity'.

Answer 1

Date	Description	Debit	Credit
31/Dec/2014
(a)	Depriciation Account	950
	Accumulated Depriciation -Building Account		950
	( Being depriciation charged on building )
(b)	Advertising Expense Account	12000
	Outstanding Advertising Account		12000
	( Being unpiad advertising expense is adjusted )
(c)	Salaries Expense Account	47500
	Outstanding Salaries Account		47500
	( Being outstanding salaries account adjusted )
(d)	Depriciation Account	900
	Accumulated Depriciation - Furniture Account		900
	( Being depriciation charged on furniture )
(e)	Property Tax Expense Account	600
	Outstanding Property Tax account		600
	( Being property tax outstanding )
(f)	Supplies Expense Account ( $4400 - $3750 )	650
	Supplies Account		650
	( Being supplies adjusted )
(g)	Unearned Consulting Fees Account	4000
	Consulting Fees Revenue Account		4000
	( Being revenue earned from the advance income received )
(h)	Insureance Expense Account ( 12000 - 5500 )	6500
	Prepaid Insureance Account		6500
	(being prepaid insureance adjusted )
(i)	Depriciation Expense Account	200
	Accumulated Depriciation - Equipment Account		200
	( Being depriciation charged on equipment )
(j)	Rent Expense Account ( 21500 - 18000 )	3500
	Prepaid Rent Account		3500
	( Being prepaid rent adjusted )

Note - Please note that the above journal entries are adjusting entries and the djustment entries are made on the closing date of the financial year. So all the entries will be entered in the books on 31st December, 2014.

2)

(a) Depriciation Account = - Retained Earnings , Accumulated Depriciation - Buliding = - Building Account

(b) Advertising Expense = - Retained Earnings , Outstanding Advertising Account = + Current Liabilities

(c) Salaries Expense = - Retained Earnings , Outstanding Salaries Expense = + Current Liabilities

(d) Depriciation Account = - Retained Earnings , Accumulated Depriciation - Furniture Account = - Furniture

(e) Property Tax = - Retained Earnings , Outstanding Property Tax Expense = + Current Liabilities

(f) Supplies Expense = - Retained Earnings , Supplies Account = - Current Assets

(g) Unearned Consulting Fees = - Current Liabilities , Consulting Fees Revenue = + Retained Earnings

( h) Insureance Expense = - Retained earnings , Prepaid Insureance = - Current Assets

(i) Depriciation Expense = - Retained Earnings , Accumulated Depriciation - Equipment = - Equipment

(j) Rent Expense = - Retained Earnings , Outstanding Retained Earnings = + Current Liabilities