eBook Print tem Adjusting Entries Kretz Corporation prepares monthly financial statements and therefore adjusts its accounts at the end of every month. The following information is available for March 2016 Required: For each of the following situations, prepare the appropriate adjusting entry to be recorded on March 31, 2016. How does this entry affect the accounting equation? Do not round intermediate calculations. If required, round your final answers to the nearest dollar. Indicate the effect on financial statement items by selecting"-" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement. a. Kretz Corporation takes out a 90-day, 7 %, $24,000 note on March 1, 2016, with interest and principal to be paid at maturity. Assume a 360-day year. Journal Balance Sheet Stockholders Description Debit Credit Assets Liabilities + Equity Revenues Interest Expense NE NE NE Interest Payable Income Statement Net Expenses Income My All adjusting entries involve either an asset or a liability and either a revenue or an expense ther that with arial action enenses and revenues are recognized in the period incurred regardless of when cash is actually received or paid b. The asset account Office Supplies on Hand has a balance of $1,260 on March 1, 2016. During March, Kretz adds $750 to the account for purchases during the period. A count of the supplies on hand at the end of March indicates a balance of $1,390, Journal Description Debit Credit Assets Accounts Receivable Balance Sheet Liabilities Stockholders Equity Revenues Income Statement Expenses Accounts Receivable c. The company purchased office equipment last year for $60,400. The equipment has an estimated useful life of six years and an estimated salvage value of $4,480, the straight method of depreciation. Balance Sheet Stockholders Equity Revenues Expenses Journal Description Debit Credit Assets Liabilities es seven days per week with a daily payroll of $1,000. Wage earners are paid every Sunday. The last day of the month is Thursday, March 31. Journal Balance Sheet Stockholders' Description Debit Credit Assets Liabilities Equity Revenues Income Statement Expenses Check My W All adjusting entries involve either an asset or a liability and either a revenue or an expense Remember that with accrual accounting, expenses and revenues are recognized in the period incurred regardless of when cash is actually received or paid e. The company rented an idle warehouse to a neighboring business on February 1, 2015, at a rate of $2,300 per month. On this date, Kretz Corporation credited Rent Collected in Advance for six months rent received in advance. Journal Balance Sheet Stockholders Income Statement e. The company rented an idle warehouse to a neighboring business on February 1, 2016, at a rate of $2,580 per month. On this date, Kratz Corporation credited Rent Collected in Advance for six months rent received in advance. Journal Description Debit Credit Assets Liabilities Balance Sheet Stockholders Equity Income Statement 1. On March 1, 2016, Kretz Corporation credited a liability account, Customer Depesits, for $4200. This sum represents an amount that a customer paid in advance and that Kretz will evenly over a four-month period. Journal Balance Sheet Stockholders Esity Revenues Description Debit Credi Assets Labilities Income Statement Expenses Chec f. On March 1, 2016, Kretz Corporation credited a liability account, Customer Deposits, for $4200. This sum represents an amount that a customer paid in advance and that Kretz will earn evenly over a four-month period. Journal Balance Sheet Stockholders Equity Revenues Description Debit Credit Assets Liabilities Income Statement Expenses ChMy Ve All adjusting entries involve either an asset or a Sability and either a revenue or an expense Remember that with accrual accounting, expenses and revenues are recognized in the period incurred regardless of when cash is actually recaived or paid Ok My W All adjusting entries involve either an asset or a lability and either a revenue or an expense Remember that with accrual accounting, expenses and revenues are recognized in the period incurred regardless of when cash is actually received or paid d. Based on its income for the month, Kretz Corporation estimates that federal income taxes for March amount to $3,060. Journal Balance Sheet Description Debit Credit Assets Liabilities Stockholders Equity Revenues All austing entries involve either an asset or a Kability and wither a revenue or an expense Remember that with accrual accounting, expenses and revenues are recognized in the period inned megane of when cash actually received or d Check My Wark Income Statement Expenses nev Sean Sult for Grad 59 Clear 834PM