ORIGINAL Question (This has been asked and answered on previous forums)

John's Boat Yard, Inc., repairs, stores, and cleans boats for customers. It is completing the accounting process for the year just ended on November 30. The transactions for the past year have been journalized and posted. The following data with respect to adjusting entries at year-end are available:

John's winterized (cleaned and covered) three boats for customers at the end of November, but did not record the service for $4,200.

On October 1, John's paid $1,680 to the local newspaper for an advertisement to run every Thursday for 12 weeks. All ads have been run except for three Thursdays in December to complete the 12-week contract.

Johns borrowed $258,000 at a 9 percent annual interest rate on April 1 of the current year to expand its boat storage facility. The loan requires John's to pay the interest quarterly until the note is repaid in three years. John's paid quarterly interest on July 1 and October 1.

The Johnson family paid Johns $4,080 on November 1 to store its sailboat for the winter until May 1 of the next fiscal year. John's credited the full amount to Unearned Storage Revenue on November 1.

Johns used boat-lifting equipment that cost $260,000; $26,000 was the estimated depreciation for current year.

Boat repair supplies on hand at the beginning of the current year totaled $18,100. Repair supplies purchased and debited to Supplies during the year amounted to $47,600. The year-end count showed $13,100 of the supplies on hand.

Wages of $5,300 earned by employees during November were unpaid and unrecorded at November 30. The next payroll date will be December 5 of the next fiscal year.

Current Questions: (Questions I am seeking help with - I am seeking explanations)

I am confused by this problem. The fiscal year for this company goes from November 30th to November 30th, from year to year? Is that correct?

We are then making adjusting entries to cover the remainder of the calendar year, which in this instance covers the month of December?

How is the answer to "C" regarding the payment of interest derived? I see that the company pays 9% interest on a $258,000 dollar loan, which equates to $21,600 dollars interest per year. It seems that the answer seeks the student to solely log two months interest or $3,600 dollars. But if the matter was paid on July 1st and Oct 1st, by the time of Nov. 30th would these transaction not have already been recorded??? What is going on here?

Also, specifcally with respect to part "F" concerning the cost of supplies - Would we not determine the unadjusted balance by combining the beginning balance ($18,100) + purchases ($47,600) to arrive at an unadjusted balance from which we would need to adjust down to the current level of supplies on hand ($13,100)? I do not understand how/why we would simply adjust from the beginning balance to the ending balance and assume that entries for the $47,600 dollars worth of supply purchases were not journaled and recorded. Are you able to explain this, as similar posts simply subtract beginning balance from ending balance and add entries to the ledger for the difference. (This differs from the text's example and I cannot tell what I should be reading within the context of the problem to know when to do what method.)