Problem #3 - 15 points

A local plant store asked you to help them with their year-end adjusting entries. Using the space provided below, 1) record each adjusting entry for December 31 in proper journal entry format and 2) complete the subsequent 3 questions about potential overstatements/understatements. A written explanation for each journal entry is NOT required. You will receive 3 points for each correct adjusting journal entry and 1 additional point for each correctly documented overstatement/understatement.

a. On November 1st, the plant store was pre-billed $1,200 for 4 months of local TV advertising (November, December, January, and February). When these payments were made, the plant store debited prepaid advertising. What adjusting journal entry is required on December 3 1st?

b. At the beginning of the year, the plant store purchased $3,250 of office supplies, debiting supplies for the full amount. Office supplies costing $215 remain unused on December 31St. What adjusting journal entry is required on December 3 1st?

c. The plant store estimates depreciation expense for $2,000 needs to be recorded. What adjusting journal entry is required on December 31 St?

d. In December, the plant store received $1,500 cash in advance from Anne Nguyen for 30 house visits to water her plants over the next 6 months. The entire amount was recorded as unearned revenue when received. During December, the store employees made 5 visits to Anne's house to water her plants. What adjusting journal entry is required on December 31st?

1. What would be the total $ overstatement/understatement of total revenue if the previous adjusting entries were not made? Be sure to clearly indicate if the $ amount is an overstatement OR understatement.
2. What would be the total $ overstatement/understatement of total expenses if the previous adjusting entries were not made? Be sure to clearly indicate if the $ amount is an overstatement OR understatement.

3. What would be the total $ overstatement/understatement of total liabilities if the adjusting entries were not made? Be sure to clearly indicate if the $ amount is an overstatement OR understatement.