Pierce Company was founded in 2016 and engaged in the following transactions:

1. Issued common stock for cash

2. Paid rent in advance for 3 months at a time

3. Purchased supplies on account

4. Collected cash from a customer for services to be provided over a period of 1 year

5. Paid a cash dividend to stockholders

6. Purchased a 2-year fire insurance policy

7. Provided services to customers on account

8. Collected cash from accounts receivable

9. Paid cash for various operating expenses

Required:

a) Which general ledger accounts and the type of account will be used to enter each of the above journal entries (amounts not needed).

b) Which of the above transactions would require adjusting entries at year end and how do you calculate the amount of the adjusting entry?

c) Why are adjusting entries required before financial statements can be prepared?