Question 3

Freds Security has the following transactions and items requiring December 31, 2017 adjustments. Prepare journal entries as necessary.

a.) i.) The company purchased a 12-month insurance policy for $2,000 cash on March 1, 2017.

ii.) A December 31 adjustment is required.

b.) i.) The company entered into a contract to provide security work for a client. The client paid Freds security $10,000 on October 1, 2017. The company was required to provide security service for 12 months, from October 1, 2017 November 30, 2018.

ii.) A December 31 adjustment is required (assume the company provided security service as promised up to December 31).

c.) The company pays salaries of $8,000 every week on Sunday, based on a 7-day workweek. Assume salaries are earned at the same rate each day. This year, December 31 falls on a Thursday. Record the necessary adjustment.

d.) i.) The company purchased a car for $15,000 cash on February 1, 2017. The car is expected to have a 10-year useful life and no residual value. The companys accountant wishes to use straight line depreciation.

ii.) A December 31 adjustment is required.