(1) Prepare the necessary adjusting entries at December 31, 20X1 for the Ranger Company for each of the following situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. Show your calculations for partial credit.

(2) For each adjusting entry, identify whether it is an accrual or a deferral.

1. A two-year fire insurance policy was purchased on July 1, 20X1 for $6,000. The company originally debited Prepaid insurance expense for the entire amount.

2. Equipment costing $78,000 with an 6 year life and a salvage value of $6,000 had been purchased on Sept. 1, 20X1. Use thestraight-line depreciation method.

3. Utility expenses of $3,000 that have not been previously recorded will be paid in early January 20X2.

4. On May 1, 20X1 collected $24,000 in advance for services to be performed evenly over the next 12 months and credited Service Revenue at that time.

5. On March 1, 20X1, the company borrowed $100,000 for 2 years at 6% from Alliance Bank. Interest is paid annually.