Preparing Adjusting Journal Entries

The following transactions and events for Stellar Corp. are being reviewed for possible adjusting entries at December 31, 2020 (the end of its accounting period)

1. Equipment used in operations cost $420,000; it was purchased on July 1, 2017. It has an estimated useful life of 12 years. Straight-line depreciation is used.

2. The company estimates an increase in Allowance for Doubtful Accounts of $3,000 is required to recognize accounts receivable of $300,000 at net realizable value.

3. At the beginning of 2020, office supplies amounted to $600. During 2020, office supplies of $8,800 were purchased; this amount was debited to Office Supplies Expense. An inventory of office supplies at the end of 2020 showed $400 still available. However, the January 1 balance of $600 is still recorded in the Office Supplies account.

4. On July 1, 2020, the company paid a three-year insurance premium of $2,160; this amount was debited to Prepaid Insurance.

5. On August 1, 2020, the company borrowed $120,000 cash from Shar Bank. The loan was for 12 months at 9% interest payable at maturity date.

6. On December 31, 2020, salaries earned by employees but not yet paid (or recorded) was $18,000.

Prepare the adjusting entry (or entries) that are necessary, if any, on December 31, 2020, for each item 1 through 6.

Note: If a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero).