Extracts from Bonsai Products Corp.'s (BPC) unadjusted trial balance for its year ended

December 31, 20X7, appear below:

Bonsai Products Corp.

Unadjusted trial balance (extracts)

As at December 31, 20X7

Account Debit Credit

Prepaid expenses 3,500

Note receivable 69,302

Office building 400,000

Accumulated depreciation office building

215,625

Computer equipment 16,400

Accumulated depreciation computer equipment

7,900

BPC reports its financial results in accordance with IFRS. It uses a perpetual system to

account for its inventory. The company's policy is that it only prepares accruals and adjusting

entries at year end.

Pertinent information follows:

On June 1, 20X7, BPC paid $2,400 for an insurance policy that provides for fire damage

from June 1, 20X7, to May 31, 20X8. The insurance premium was debited to prepaid

expenses. The pre-existing balance in this account was for another annual insurance policy

that expired on May 31, 20X7.

BPC depreciates its building on a straight-line basis over 20 years. The estimated residual

value of the building at the end of its useful life is $25,000.

BPC depreciates its computer systems using the declining balance method at a rate of 40%

per year. There were no additions or disposals of computers during the year.

On October 1, BPC sold a 24-month service agreement for $24,000 covering the period

from December 1, 20X7, to November 30, 20X9, crediting unearned revenue. BPC's policy

Intermediate Financial Reporting 1 Project 1

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is to recognize revenue equally over the life of the service agreement. Related expenses

have already been recognized in the company's accounts.

The note receivable was taken on February 1, 20X7. It is repayable at $20,000 per annum,

first due February 1, 20X8. The payment includes interest at 6% per annum, which is the

market rate of interest for loans of this nature.

BPC's review of its shipping records indicates that inventory costing $700 was sold FOB

destination on account for $1,100 on December 28, 20X7, but was not delivered until

January 8, 20X8. BPC recorded the sale on December 28.

What do a the required adjusting journal entries for the year ended December 31, 20X7 look like?