Assume it is now December 31, 2015, and Nicole has just completed her first year of operations at Nicoles Getaway Spa. After looking through her trial balance, she noticed that there are some items that have either not been recorded or are no longer up-to-date.

a.

Nicoles Getaway Spa is renting its space at a cost of $500 per month. On September 1, 2015, Nicole paid eight months rent in advance using cash. This prepayment was recorded in the account Prepaid Rent back in September.

b.

The building, purchased at the beginning of the year for $37,000 cash, has estimated depreciation of $1,000 for 2015, but none has been recorded yet.

c.

Salaries and Wages Payable to the support staff at Nicoles Getaway Spa have been paid up to December 26, 2015. The support staff worked both December 27 and 28 and will be paid on January 5, 2016. Salaries and Wages Payable amount to $1,200 per day. The spa was closed December 2931.

d.

The insurance policy, purchased on June 1 for $2,400 cash, provides coverage for 12 months. The insurance coverage since June has now been used up.

e.

The unadjusted amount in the Spa Supplies account was $1,000 at December 31, 2015, for supplies purchased on account. A year-end count showed $600 of supplies remain on hand.

f.

On the last day of December, a customer obtained spa services by using a $70 gift certificate that was purchased earlier in the month. Use of the gift certificate to pay for these services had not yet been recorded

1. For each of the items listed above, identify whether an accrual adjustment, a deferral adjustment, or no adjustment is required

2. For each of the deferral adjustments, prepare the initial journal entry that would have been recorded. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) (please see pic 01)

3. Prepare the adjusting journal entries that should be recorded for Nicoles Getaway Spa at December 31, 2015, assuming that the items have not been adjusted prior to December 31, 2015. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) (please see pic 02 and 02a)

pic 02

pic 02a

1. Record renting of spa space at the a cost of $500 per month. On September 1, 2015, Nicole paid eight months' rent in advance using cash. This prepayment was recorded in the account prepaid Rent back in September. 2. Record the purchase of a building at the beginning of the year for $37,000 cash that has estimated depreciation of $1,000 for 2015, but none has been recorded yet. 3. Record the entry for payment of salaries and wages to the support staff at Nicole's Getaway Spa. The Salaries and wages have been paid up to December 26, 2015.The support staff worked both December 27 and 28 and will be paid on January 5, 2016. Salaries and wages amount to $1,200 per day. The spa was closed December 29-31. 4. Record the entry for insurance expense where an insurance policy, purchased on June 1 for $2,400 cash, provides coverage for 12 months. The insurance coverage since June has now been used up. 5. Record the entry for spa supplies where the unadjusted amount in the Spa Supplies account was $1,000 at December 31, 2015, for supplies purchased on account. A year-end count showed $600 of supplies remain on hand. 6. Record the entry for the spa services obtained by a customer by using a $70 gift certificate that was purchased earlier in the month. Use of the gift certificate to pay for these services had not yet been recorded. journal entry has been entered