I. Flower Hills, Inc. has prepared a year-end 2021 trial balance. Certain accounts in the trial balance do not reflect all activities that have occurred.

Required:

Prepare adjusting journal entries, as needed, for the following items. Write "None" if no adjusting entry is needed.

1. The Supplies account shows a balance of $540, but a count of supplies reveals only $330 on hand.

2. Flower Hills employees work Monday through Friday, and salaries of $3,600 per week are paid each Friday. Flower Hills' year-end falls on Tuesday.

3. On November 1, 2021, Flower Hills borrowed $50,000 from a local Bank and signed a note. The note requires interest to be paid semi-annually on April 30 and October 31 at 12%.

4. On October 1, 2021, Flower Hills lent $90,000 to another company. A note was signed with principal and 8% interest to be paid on September 30, 2022.

5. On November 1, 2021, the company paid its landlord $6,000 representing rent for the months of November through January. Rent expense was debited.

6. On April 1, 2021, the company paid $2,400 for a two-year fire and liability insurance policy and debited prepaid insurance.

7. On November 1, 2021, the bar area was leased to Jack Donaldson for two years. Flower Hills received $12,000 representing the first six months rent and credited rent revenue.

8. Flower Hills depreciable equipment has a cost of $30,000, a five-year life, with a residual value of $3,000. The equipment was purchased in 2020. The straight-line depreciation method is used.

II. A list of statements follows:

1. GAAP states that the two primary qualitative characteristics that make accounting information useful for decision-making purposes are ____________________ and ____________________.

2. Expensing the purchase of waste paper baskets that have a three-year estimated useful life at the date of acquisition is a permissible procedure according to the ____________________ constraint.

3. Corporations prepare quarterly financial statements in order to help achieve ____________________, an ingredient of the primary quality of relevance.

4. ____________________ ____________________ is the overall qualitative characteristic to be used in judging the quality of accounting information.

5. The three components of relevance are ____________________, ____________________, and ____________________ ____________________.

Required: Fill in the words necessary to complete the statements.