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Section 2: 7 Computational Problems worth 70 Points Problem #1: Error Correction The partial trial balance of Zeno company shows the following amounts at December 31st: Account Credit Debit 54.350 $1,800 Supplies Salaries and Wages Payable Interest receivable Prepaid insurance Unearned Rent Interest payable $4,800 $75,000 $24.000 The following additional information has been given (assuming that the books have not been closed a) The total amount of supplies on hand at December 31st was: $2,150 b) Actual accrued salaries and wages at December 31st was: $5.200 The actual amount of Accrued interest on investments is: $4,000 d) The un-expired portion of pre-paid insurance at Dec. 31st is: $57,000 Required: Complete the adjusting entries necessary at December 314 (Use the grid below to record your answers): Account Debit Supplies Expense Supplies Account Salaries and wages expense Salaries and wages payable Account Interest Revenue interest Receivable Account Insurance Expense Prepaid insurance Problem #2 Lessee Journal Entries: On January 1st 2011, The Mandalay Company leased manufacturing equipment from Western Company for a term of 20 year Lease payments in the amount of $100,000 are to be made annually on December 31st of each year. Title to the equipment passes to Mandalay at the end of the lease term and the lease is not cancellable. Additional information is shown below: a) The equipment has an estimated life of 25 years and a $750,000 carrying value on Western's books. b) The implicit rate of the lease is 10%. This rate is known to Mandalay. c) Both Mandalay and Western use straight line depreciation Requirement A: Record the journal entry on the books of the Lessee to record the lease on January 1, 2011: 5 Page Requirement B: Prepare the following journal entries: 1) The December 31, 2011 journal entries to record the lease payment (including interest) 2) The December 31, 2011 journal entry to record depreciation