Handy Haulers Company is at the end of its fiscal year, December 31, 2011. The following data

Question:

Handy Haulers Company is at the end of its fiscal year, December 31, 2011. The following data were developed from the company's records and related documents:

a. On July 1, 2011, a one-year insurance premium on equipment in the amount of $\$ 1,200$ was paid and debited to prepaid insurance. Coverage began on July 1.

b. During 2011 , office supplies amounting to $\$ 800$ were purchased for cash and debited in full to supplies inventory. At the end of 2010, the inventory of supplies remaining on hand (unused) amounted to $\$ 200$. The inventory of supplies on hand at December 31, 2011, showed $\$ 300$.

c. On December 31, 2011, Bert's Garage completed repairs on one of the company's trucks at a cost of $\$ 800$; the amount is not yet recorded and by agreement will be paid during January 2012.

d. In December 2011, a tax bill for $\$ 2,000$ on land owned during 2011 was received from the city. The taxes, which have not been recorded, are due on February 15, 2012.

e. On December 31, 2011, the company completed a contract for another company. The bill was for $\$ 8,000$ payable within 30 days. No journal entry has been made for this transaction.

f. On July 1,2011 , the company purchased a new hauling van at a cash cost of $\$ 23,600$. The estimated useful life of the van was 10 years, with an estimated residual value of $\$ 1,100$. No depreciation has been recorded for 2011 (compute depreciation for six months in 2011 ).

g. On October 1,2011 , the company borrowed $\$ 10,000$ from the local bank on a one-year, 9 percent note payable. The principal plus interest is payable on September $30,2012$.

h. The profit before any of the adjustments or income taxes was $\$ 30,000$. The company's income tax rate is 30 percent. Compute the adjusted profit after considering the effects of Transactions

(a) through $(g)$ to determine the income tax expense for 2011.

Required:

1. Indicate whether each transaction relates to a deferred revenue, deferred expense, accrued revenue, or accrued expense.

2. Prepare the adjusting entry required for each transaction at December 31, 2011.

3. Using the following headings, indicate the effect of each adjusting entry and the amount of each. Use + for increase, - for decrease, and NE for no effect.

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