Prepare the necessary adjusting entries at December 31 for each of the items listed in BE 2–4. Depreciation on the equipment is $12,000 per year.

In BE 2-4,

Prepare journal entries for each of the following transactions for a company that has a fiscal year-end of December 31:

(1) On October 1, $12,000 was paid for a one-year fire insurance policy;

(2) On June 30 the company lent its chief financial officer $10,000; principal and interest at 6% are due in one year; and

(3) Equipment costing $60,000 was purchased at the beginning of the year for cash.