On November 30, the end of the current fiscal year, the following information is available to assist Pinder Corporation’s accountants in making adjusting entries:

a. Pinder Corporation’s Supplies account shows a beginning balance of

$2,174. Purchases during the year were $4,526. The end-of-year inventory reveals supplies on hand of $1,397.

b. The Prepaid Insurance account shows the following on November 30:

Beginning balance $3,580 July 1 4,200 October 1 7,272 The beginning balance represents the unexpired portion of a one-year policy purchased the previous year. The July 1 entry represents a new oneyear policy, and the October 1 entry represents additional coverage in the form of a three-year policy.

c. The following table contains the cost and annual depreciation for buildings and equipment, all of which Pinder Corporation purchased before the current year:

d. On September 1, the company completed negotiations with a client and accepted an advance payment of $16,800 for services to be performed in the next year. The $16,800 was credited to Unearned Services Revenue.

e. The company calculated that as of November 30, it had earned $4,000 on an $11,000 contract that would be completed and billed in January.

f. Among the liabilities of the company is a note payable in the amount of $300,000. On November 30, the accrued interest on this note amounted to $15,000.
g. On Saturday, December 2, the company, which is on a six-day workweek, will pay its regular salaried employees $12,300.
h. On November 29, the company completed negotiations and signed a contract to provide services to a new client at an annual rate of $17,500.
i. Management estimates income taxes for the year to be $25,000.
Required 1. Prepare adjusting entries for each item listed above.
2. User insight: Explain how the conditions for revenue recognition are applied to transactions e and h.
Determining Adjusting Entries, Posting to T Accounts, and Preparing and Adjusted Trial Balance

Transcribed Image Text:

Account Buildings Equipment Cost $286,000 374,000 Annual Depreciation $14,500 35,400