Question 4

Teal Corporation prepares annual financial statements and therefore adjusts its accounts on December 31, 2020. The following information is available for year 2020 : a. Teal purchased supplies of $2,700 in January. At December 31 , there was $1,500 of supplies on hand. b. The $17,000 note payable was issued on September 1,2020 . It is a 12%,6-month note, so the interest for each month is 17.00012% * (1/12)=$170. The company does not pay interest until the due date (Mar 1st,2021 ), c. Teal paid for a one-year insurance policy of $1,800. Coverage began on March 1, 2020 . d. At December 31, Teal determines that it has performed service of $1,000 for Blue Corporation, although the company has not billed Blue Corporation yet. Required: (1) Journalize the appropriate adjusting entries on December 31, 2020 . (2) Indicate the direction of effects (Increase, Decrease, of No Effect) of each adjusting entry on the three elements onthe Balance Sheet (Assets, Liabilities, and SE). For stue toolbar, press AUT+F10-DC) of ALT+FN+T-10 IMaci