1 Problem 4.17 The financial year for Drip Dry Cleaning Services ends on 30 June. Using the following information, make the necessary adjusting entries at year-end. Ignore GST. On 15 February, Danielle Drip's business borrowed $16 000 from Northern Bank at 8% interest. The principal and interest are payable on 15 August 2 Rent of $3600 for the 6-month period ending 31 July is due to be paid in August. The annual depreciation on equipment is estimated to be $7200. The 1 July balance in the Accumulated Depreciation account was $15 600. 3 4 Drip Dry Cleaning Services purchased a 1-year insurance policy on 1 March of the current year for $660. A 3-year policy was purchased on 1 November of the previous year for $2700. Both purchases were recorded by debiting Prepaid Insurance. The business has two part-time employees who each earn $220 a day. They both worked the last 3 days in June for which they have not yet been paid. 5 6 On 1 June, the Highup Hotel paid the business $2100 in advance for doing their dry cleaning for the next 3 months. This was recorded by a credit to Unearned Dry Cleaning Revenue. Water for June of $850 is unpaid and unrecorded. The supplies account had a $280 debit balance on 1 July. Supplies of $1560 were purchased during the year and $190 of supplies are on hand as at 30 June. 7 8 Balance Balance in the Dollar effect reported in account before of adjusting 30/6 balance Balance sheet Entry Account adjustment entries sheet classification 1. Interest Payable 2. Rent Payable 3. Accumulated Depreciation 4. Prepaid Insurance 5. Wages Payable 6. Unearned Dry Cleaning Revenue 7. Electricity Account Payable 8. Supplies *For each account, indicate whether it is an asset, liability or equity, and whether it is classified as a current or non- current asset or liability As you know, all adjusting entries affect one statement of financial position account and one income statement account. Based on your adjusting entries prepared