Account (+ or -) Adjustment Account (+ or -) Adjustment LO2L03 Preparing Adjusting Entries P2. On November 30, the end of the current fiscal year, the following infor- mation is available to assist Caruso Company's accountants in making adjusting entries: a. Caruso Company's Supplies account shows a beginning balance of $2,350. Purchases during the year were $4,218. 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 $4,720 July 1 4,200 October 1 7,272 The beginning balance represents the unexpired portion of a one-year policy purchased in September of the previous year. The July 1 entry repre- sents a new one-year 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 cquipment, all of which Caruso Company purchased before the current year: Account Cost Annual Depreciation Buildings $298,000 $16,000 Equipment 374,000 40,000 d. On September 1, the company completed negotiations with a client and accepted an advance of $18,600 for services to be performed monthly in the next year. The $18,600 was credited to Uncarncd Services Revenue. e. The company calculated that as of November 30, it had earned $7,000 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 $18,000 g. On Saturday, December 2, the company, which is on a six-day workweek, will pay its regular employees their weekly wages of $15,000. h. On November 29, the company completed negotiations and signed a con- tract to provide services to a new client at an annual rate of $23,000. Required 1. Prepare adjusting entries for each item listed above. ser insight 2. Explain how the conditions for revenue recognition are applied to transac- tions e and h