E4-6 (Algo) Recording Adjusting Entries and Reporting Balances in Financial Statements LO4-1, 4-2 Gauge Construction Company is making adjusting entries for the year ended March 31 of the current year. In developing information for the adjusting entries, the accountant learned the following: a. The company paid $4,000 on January 1 of the current year to have advertisements placed in the local monthly neighborhood paper. The ads were to be run from January through June. The bookkeeper debited the full amount to Prepaid Advertising on January 1. b. At March 31 of the current year, the following data relating to Construction Equipment were obtained from the records and supporting documents. Construction equipment (at cost) Accumulated depreciation (through March 31 of the prior year) Estimated annual depreciation for using the equipment Required: $560,000 149,600 42,800 1. Record the adjusting entry for advertisements at March 31 of the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet < 1 Record the adjusting entry related to advertisements Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal Problems 2. Record the adjusting entry for the use of construction equipment during the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 Record the adjusting entry related to the use of construction equipment. Note: Enter debits before credits Event General Journal Debit Credit Record entry Clear entry View general journal 3. What amount should be reported on the current year's income statement for Advertising Expense For Depreciation Expense? Advertising expense Depreciation expense 4. What amount should be reported on the current year's balance sheet for Prepaid Advertising? For Construction Equipment (at net book value)? Prepaid advertising Construction equipment (net)