ABC Corporation is a new company that buys and sells office supplies. Business began on January $1,2021.$

Make all $14$ adjustments on the "Adjusting Journal Entries" tab.

$1$ On January $1,2021,$ ABC purchased a one$-$year liability insurance policy for $$50,000$

Upon purchase, the following journal entry was made:

Dr Prepaid insurance $50,000$

Cr Cash $50,000$

The expired portion of insurance must be recorded as of $12/31/21.$

Notice that the expired portion from January through November has been recorded already.

Make sure that the Prepaid Insurance balance after the adjusting entry is correct.

$2$ Depreciation expense must be recorded for the month of December.

The building was purchased on February $1,2021$ for $$500,000$ with a remaining useful life of $25$ years and a salvage value of $$3,000.$

The method of depreciation for the building is straight$-$line.

The equipment was purchased on February $1,2021$ for $$260,000$ with a remaining useful life of $4$ years and a salvage value of $$1,800.$

The method of depreciation for the equipment is double$-$declining balance.

Depreciation has been recorded for the building and equipment for months February through November.

$3$ On December $1,2021,$ XYZ Co$.$ agreed to rent space in ABC's building for $$5,000$ per month,

and XYZ paid ABC on December $1$ in advance for the first three months' rent.

The entry made on December $1$ was as follows:

Dr Cash $15,000$

Cr Unearned rent revenue $15,000$

The unearned revenue account must be adjusted to reflect the amount earned as of $12/31/21.$

$4$ Per timecards, from the last payroll date through December $31,2021,$ ABC's employees have worked a total of $300$ hours.

Including payroll taxes, ABC's wage expense averages about $$30$ per hour. The next payroll date is January $5,2022.$

The liability for wages payable must be recorded as of $12/31/21.$

$5$ On November $30,2021,$ ABC borrowed $$100,000$ from American National Bank by issuing an interest$-$bearing note payable.

This loan is to be repaid in three months $($on February $28,2022),$ along with interest computed at an annual rate of $7\%.$

The entry made on November $30$ to record the borrowing was:

Dr Cash $100,000$

Cr Notes payable $100,000$

On February $28,2022$ ABC must pay the bank the amount borrowed plus interest.

Assume the beginning balance for Notes Payable is correct.

Interest through $12/31/21$ must be accrued on the $$100,000$ note.

$6$ ABC uses a periodic inventory system, and the ending inventory for each year is determined by taking a complete

physical inventory at year$-$end. A physical count was taken on December $31,2021,$ and the inventory on$-$hand at

that time totaled $$50,000,$ which reflects historical cost. Record the adjusting entry for properly recognizing

$2021$ Cost of Goods Sold. Hint: This was the first year of operations, so beginning inventory balance is zero.

Additionally, ABC adheres to GAAP by recording ending inventory at the lower of cost and net realizable value at a total inventory level.

A review of inventory data further indicated that the current retail sales value of the ending inventory is $$45,000$ and estimated costs of

completion and shipping is $10\%$ of retail. Be sure to make an additional adjustment, if necessary, to properly value ending inventory

using the Loss and Allowance methodology. For Income Statement presentation purposes, be sure to use the Loss Method for accounting

for adjustments of inventory to market value.

$7$ It would be unusual for a company to have an asset impairment in Year $1,$ but for the sake of this example, ABC determined

that their intangible asset might be impaired on December $31,2021.$ Record the impairment adjustment, if any.

The expected future undiscounted net cash flows for this intangible asset totals $$175,000,$ and the fair value of the asset is $$165,000.$

$8$On $7/1/21$ ABC purchased $5,000$ shares of its own stock from existing stockholders as treasury stock. The cost of the treasury

stock was $$10$ per share, or $$50,000$ in total. The effects of this transaction are already shown in the unadjusted trial balance. On $12/31/21,$

ABC reissued $2,000$ shares of the treasury stock at $$15$ per share. Record the journal entry required for the reissuance of the treasury stock.

To refresh your memory, treasury stock is usually accounted for at cost$.$ When treasury stock is reissued for more than its cost, a sep