Required: Adjusting entries

a) A one-year insurance policy was purchased for $2,400 on 1 December 2020. The payment was initially recorded as an expense.

b) Sarah's Lawn Mowing Business has completed $2,000 of work for which it has neither received cash nor billed the customer.

c) On 1 March 2021, Sarahs Lawn Mowing Business entered into an agreement with a customer for a 12-month period lawn mowing services commencing on the same day. The customer paid the entire fees amounting to $24,000 on 1 March 2021. The initial payment is recorded as Unearned Revenue (liability).

d) The supplies account (Asset) had a balance of $7,000 on 1 July 2020. A physical stocktake reveals that the company has $1,300 on hand at 30 June 2021.

e) Sarahs Lawn Mowing Business purchased a new equipment on 1 February 2021 at a cost of $70,000. The residual value and useful life of the equipment are $10,000 and 5 years, respectively. The business uses a straight-line depreciation method.

f) On 30 June 2021, Sarahs Lawn Mowing Business estimated that $30,000 of the accounts receivable balance would be uncollectible. Before the year-end adjustments, the Allowance for Doubtful Debts account had a debit balance of $3,500. Prepare the journal entry to bring the allowance to its estimated amount.

g) Sarah Lawn mowing Business borrowed $24,000 from the Bank ABC on 1 October 2020 at the annual interest rate of 10%. The first interest payment will be made on 1 October 2021.