5. From the following information prepare adjusting entries in the general journal and enter them in the adjustments columns of the work sheet and cross-reference the amounts using the related alphabetic characters (round all calculations to the nearest dollar).

a. The annual provision for doubtful accounts receivable is determined to be equal to 3.5% of gross accounts receivable. *Consider the current Allowance account balance when you prepare your AJE. (This entry should be entered below the middle of General Journal page 10.)

b. An inventory count of the office supplies revealed $750 of supplies on hand at year- end.

c. The insurance premium outstanding on January 1, 2018, covers the period January 1 through August 31, 2018. The insurance premium of $7,500 recorded in August covers the period of September 1, 2018 through August 31, 2019. 84

d. The payroll summary for the employees who are paid biweekly shows the following information at December 31, 2018: Delivery and Warehouse Wages ............................ $6,850 FICA Taxes Payable ................................................ 527 Federal Withholding Taxes .................................... 725 State Withholding Taxes.......................................... 245 Net pay.............................................................. $5,353

e. The employers share of the FICA tax ($527) must be accrued; no state or federal unemployment tax is incurred during the fourth quarter because all wages and salaries earned during the last quarter exceed the maximum subject to unemployment tax.

f. Interest has accrued at 6% on the long-term notes payable since June 1, 2018. The next six-month interest payment at 4.8% on the bonds is due on March 1, 2019. The original discount on bonds payable was $13,500. No portion of the discount has been amortized for any part of 2018; the bonds are 10-yr maturity.(Use straight-line amortization)

g. The interest accrued to 12/31/18 on notes receivable is composed of the following: Platteville Plumbers, 10%, 6 months, due March 31, 2019 $ 900 Bilder Construction, 8%, 6 months, due June 17, 2019 211 Beverlys Building, 9%, 6 months, due June 26, 2019 17 $1,128 The interest accrued at 12/31/18 on the note payable of $15,000 is 12 months at 6%. Interest is payable on January 2, 2019. (The note is due in 2019.)

h. A warehouse lease payment of $19,500 was made on September 1, 2018, for rental through February 28, 2019. (The Prepaid Rent account is for advance lease payments on the warehouse. This should be the ONLY outstanding lease agreement at year end.)

i. $680 is owed to Northern Electric Co. and $215 is owed to City of Rockford for utility services provided during December 2018.

j. Plant and equipment depreciation expense is composed of the following: Accumulated Depreciation-Buildings $15,500 Accumulated Depreciation-Equipment $ 6,450 Accumulated Deprecation-Trucks $ 9,250 85

6. Income Tax expense for 2018 is $98,650 in total. Prepare the journal entry for the income tax. (Take into consideration what has already been recognized in 2018 as income tax expense.)