Individual Homework #2 Page 9 of 17 Problem #2: Year-End Adjusting Entries (54 points) Gandee Candy, a wholesale distributor of penny candy and other novelties, is a calendar-year corporation. The Company also provides consulting services under various types of contracts to purveyors of its products. The Company records adjusting entries annually immediately prior to preparing its GAAP financial statements. Required: Presented below are seven fact sets that require adjusting entries at December 31, 2020. Some fact sets also require you to prepare regular journal entries. Analyze the facts provided and prepare the required journal entries and the appropriate adjusting entries in proper general journal form. You must clearly present supporting calculations when requested. An unsupported correct answer will receive a deduction of two points. Throughout this problem you will record journal entries involving cash. I did not provide T-accounts for cash. Therefore, you will not post the cash portion of the entries. You should only use these accounts from the chart of accounts of Gandee Candy: Accounts Receivable Interest Expense Office Supplies Expense Accounts Payable Interest Receivable Prepaid Advertising Accumulated Depreciation Interest Revenue Prepaid Insurance Advertising Expense Interest Payable Prepaid Rent Cash Notes Payable Prepaid Salaries Consulting Revenue Notes Receivable Rent Revenue Deferred Consulting Revenue Office Equipment Salaries Expense Depreciation Expense Office Equipment Expense Salaries Payable Insurance Expense Office Supplies Be aware that you will not use every account listed above in your entries. tical Site Switch Macros Prop Micro Share One Page Gridlines Multiple Pages Zoom 100 New Arrange Split 10 synchronous scrolling Navigation Pune Page Width Window AB Reset Windowsition Windows Zoom Window Individual Homework #2 Page 16 of 17 Fact Set 6 (6 points) In its balance sheet at December 31, 2019, Gandes Candy reported prepaid Insurance of $13,200 that represented three months of coverage ending on March 31, 2020. On March 27, 2020, Gandes Candy paid $54,000 cash to its insurance company for premiums on an insurance policy for one year of coverage beginning on April 1, 2020 Prepare the required journal entry to record the cash paid to the insurance company on March 27, 2020, Post the entry to the applicable T-account(s). (points) DATE ACCOUNT NAMES DEBIT CREDIT At December 31, 2020, Sandee Candy determined that it must record an adjustment for the Insurance expired during 2020. Prepare the required adjusting journal entry to record the insurance used. Post the entry to the applicable T-accounts and compute their resulting balances. (points) I ADJUSTING ENTRY: DATE ACCOUNT NAMES DEBIT CREDIT Supporting Computation Required: Prepaid Insurance 13,200 Insurance Expense T PII du End PrtScn FB Home 19 Poup Pgon 6 7 8 w Macros Properties Macron Sharma References Ruler One Page View Side by Side Gridines Multiple Pages Zoom 100% Synonous Scroll New Arrange Split Switch to Side Navigation Pane Page Width Window Reset Window Position Windows Show Zoom Window Individual Homework 2 Page 17 of 17 Fact Set 27 (6 points) In its balance sheet at December 31, 2019, Gandes Candy reported office supplies of $11,675. During 2020, the company paid $38,950 cash to purchase additional supplies. Prepare the required journal entry to record the cash paid for office supplies during 2020. Post the entry to the applicable T-account(s) (7 points) DATE ACCOUNT NAMES DEBIT CREDIT At December 31, 2020, Sandee Candy determined that it must record an adjustment because office supplies costing $14,925 remained on hand. Prepare the required adjusting journal entry to record the office supplies used. Post the entry to the applicable T-accounts and compute their resulting balances. (4 points) ADJUSTING ENTRY: DATE ACCOUNT NAMES DEBIT CREDIT Supporting Computations Required: Office Supplies 11,675 Office Supplies Expense o i PrtScn Home End Poup Poon $10 % 0