Elana's Traveling Veterinary Services, Inc., completed its first year of operations on December 31. All of the year's entries have been recorded except for the following:
a. On March 1 of the current year, the company borrowed $60,000 at a 10 percent interest rate to be repaid in five years.
b. On the last day of the current year, the company received a $360 utility bill for utilities used in December. The bill will be paid in January of next year.
Required:
1. What is the annual reporting period for this company?
2. Identify whether each transaction results in adjusting a deferred or an accrued account. Using the process illustrated in the chapter, prepare the required adjusting entry for transactions (a) and (b). Include appropriate dates and write a brief explanation of each entry.
3. Why are these adjustments made?