Question 26 (2 points) Spot Out Cleaning Services Ltd, was incorporated July 1, 2018. At July 31, 2018, the trial balance shows the following balances for selected accounts: Prepaid insurance $4,500 Supplies 1,500 Equipment 36,000 Income tax payable Bank loan payable 20,000 Unearned sevenue 4.500 Service revenue 1.600 Additional information is as follows L The company purchased a one-year insurance policy for $4,500, effective July 1. 2 The Supplies account shows a balance of $1,500 but a physical count shows only $300 of supplies remaining 3. The equipment costing $36,000 is estimated to have a 10-year useful life [Do NOT consider residual value for this equipment] 4 The bank loan payable was signed July 1. It is a six-month, 6% loan Interest is payable on the first of each month $ Spot Out had performed services for a client totalling 5500 but has not yet billed the client or recorded the transaction 6. Nine customers paid for the company's six-month dry cleaning package of $500 each beginning in July. These customers received dry cleaning services in July. 7 Income tax expense for July is estimated to be $150. Accountants were required to prepare the adjusting journal entries for the first month of operation on July 31 At the end of the month, the adjusting journal entry related to the bank loan is 2018 Account Titles July 31 Loun Expense Interest Expense Debit Credit 100 100 2018 Account Titles Debit Credit July 31 Interest Expense 200 Cash 200 2018 Account Titles Debit Credit July 31 Interest Expense 200 Interest Payable 200 2018 Account Titles Debit Credit July 31 Interest Expense 100 Interest Payable 100