Instructions Clapton Guitar Company entered into the following transactions during the year. [The transactions were properly recorded in permanent (balance sheet) accounts unless otherwise indicated.] Date Transaction Jan. 25 Purchased $480 of office supplies. Feb. 1 Rented a warehouse from Hendrix Company, paying 1 year's rent of $3,600 in advance. Recorded the $3,600 payment as rent expense. Mar. 1 May May 1 31 Aug. 1 Oct. 1 Borrowed $10,000 from the bank, signing a 1-year note at an annual interest rate of 12%. The bank insisted on collecting the interest in advance, so it withheld the interest amount from the funds disbursed to Clapton. The company recorded the transaction as a debit to Cash, $8,800, a debit to Interest Expense, $1,200, and a credit to Notes Payable, $10,000. Purchased office equipment for $15,000, paying $3,000 down and signing a 2-year, 12% (annual rate) note payable for the balance. The office equipment is expected to have a useful life of 10 years and a residual value of $1,500. Straight-line depreciation is appropriate. Purchased a 3-year comprehensive insurance policy for $720. Sold land for $9,000. The purchaser made a $2,000 down payment and signed a 1-year, 10% note for the balance. The interest and principal will be collected on the maturity date. Rented a portion of the retail floor space to Harrison Inc. for $120 per month, collecting 8 months' rent in advance. Recorded the $960 receipt as rent revenue. Nov. 13 Issued checks to sales personnel totaling $900. The checks are advances for expected travel costs during the remainder of the year. On December 31, the following additional information is available: 1. Property taxes for the current year are due to be paid by April 1 of next year. The company has not paid or recorded its $2,300 property taxes for the current year. 2. The $302 December utility bill has not been recorded or paid. 3. Salaries accrued but not paid total $927. 4. Travel cost reports indicate that $787 of the $900 advanced has been used to pay for travel expenses by company personnel. On December 31, the following additional information is available: 1. Property taxes for the current year are due to be paid by April 1 of next year. The company has not paid or recorded its $2,300 property taxes for the current year. 2. The $302 December utility bill has not been recorded or paid. 3. Salaries accrued but not paid total $927. 4. Travel cost reports indicate that $787 of the $900 advanced has been used to pay for travel expenses by company personnel. 5. The Office Supplies account had a balance of $129 on January 1. A physical count on December 31 showed $174 of office supplies on hand. 6. On January 1, the Buildings account and the Store Equipment account had balances of $100,000 and $65,000, respectively. The buildings are expected to have a 20-year useful life and an $8,000 residual value, while the store equipment is expected to have a 10-year life and a $2,000 residual value. They are being depreciated using the straight-line method. 7. The income tax rate is 30% on current income and is payable in the first quarter of next year. The pretax income of the company before adjustments is $27,749. Required: On the basis of the preceding information, prepare journal entries to adjust Clapton's books as of December 31. General Journal Prepare journal entries to adjust Clapton's books as of December 31. General Journal Instructions How does grading work? 1 DATE Dec. 31 Supplies Expense Office Supplies GENERAL JOURNAL ACCOUNT TITLE PAGE 1 Score: 326/350 POST. REF. DEBIT CREDIT 435.00 2 435.00 3 Dec. 31 Prepaid Rent 300.00 4 Rent Expense 300.00 5 Dec. 31 Discount on Notes Payable 200.00 6 Interest Expense 200.00 7 Dec. 31 Depreciation Expense 11,800.00 8 Accumulated Depreciation: Building 4,600.00 9 Accumulated Depreciation: Store Equipment 6,300.00 10 10 Accumulated Depreciation: Office Equipment 900.00 11 Dec. 31 Interest Expense 960.00 12 Interest Payable 960.00 13 Dec. 31 Insurance Expense 140.00 11 Dec. 31 Interest Expense 960.00 12 Interest Payable 960.00 13 Dec. 31 Insurance Expense 140.00 14 Prepaid Insurance 140.00 15 Dec. 31 Interest Receivable 292.00 16 Interest Receivable 292.00 17 18 19 Dec. 31 Interest Receivable Unearned Rent Dec. 31 Travel Expenses 600.00 600.00 787.00 20 Prepaid Travel 21 Dec. 31 Property Tax Expense 787.00 2,300.00 22 Property Tax Payable 2,300.00 23 Dec. 31 Salaries Expense 2,840.00 24 Salaries Payable 2,840.00 25 Dec. 31 Utilities Expense 247.00 26 Utilities Payable 247.00 27 Dec. 31 Income Tax Expense 1,788.00 28 Income Taxes Payable 1,788.00