NOTE: There are 2 separate and independent parts to this discussion:

1. Prepare the proper adjusting entries to record the following transactions:

a. The Smith company purchased $1,000 of supplies during the month of December and originally recorded the purchase in the supplies account. The beginning supply account balance was zero and the ending supply account balance was $300. Record the proper journal entry to record the supplies used up during the month of December.

b. The Smith company has a CNC machine that was purchased last year. The company records annual depreciation on the machine of $10,000. Prepare the adjusting entry to record the depreciation on the machine.

c. On December 31, at the end of the day, the sales department at Smith shipped merchandise on account to their customer, Mulligan Inc. for $5,000. Record the adjusting entry to record this transaction in the general journal of Smith Co. before the company closes the books for December.

d. The Smith company pays out $1,000 a day to the employees. The employees are paid every Friday. December 31 is on Wednesday. Record the adjusting entry for this transaction at the end of the month.

e. Nordie & Co. received a pre-payment from Jackson Inc. to cover the cost of some material needed to produce a part that Jacskson was purchasing from Nordie. Nordie originally recorded the payment as a liability in Unearned Revenue. The payment was for $8,000. As of December 31, Nordie used half of the material and shipped the product to Jackson Inc. Record the adjusting entry to record the revenue earned by Nordie at month end.

2. Prepare an adjusted trial balance from the following adjusted account balances (assume accounts have normal balances). The adjusted trial balance is prepared after all the adjusting entries have been posted. The adjusted trail balance just lists the debit balances on one side and the credit balances on the other. When you add each column separately, they should both add up to the same amount.

account balances

Account Balances
Accounts payable	$ 6,600
Accounts receivable	12,750
Administrative expense	49,150
Cash	28,900
Common stock	15,000
Prepaid insurance	8,800
Service revenue	78,000