Saff transaction Worksheet Adjusting Entries (53-63) 1. The amortization expense for the year is $8000. Decrease the patent asset. 2. Incurred but unpaid income taxes amount to $40,000. 3. The adjustments to bad debt expense she I'll be based on a desired ending balance in the allowance for doubtful accounts account of 10% of the ending A/R balance (hint: there is already a balance in the allowance account) 4. Depreciation on the equipment is based on a useful life of 20 years and $20,000 salvage value. 5. Utilities for the year were $17,500 and will be paid next year. 6. The annual interest rate on the note payable is 9.50%. The note has been outstanding for the entire year (for the amount for the note, see the beginning balance) 7. A count of the remaining office supplies at the end of the year indicates that there is only $2,750 of supplies left. Make the adjustment to account for the used up supplies. 8. Depreciation on the building is based in n a useful life of 40 years and no salvage value. Sa$20,000 salvage value. 5. Utilities for the year were $17,500 and will be paid next year. 6. The annual interest rate on the note payable is 9.50%. The note has been outstanding for the entire year (for the amount for the note, see the beginning balance) 7. A count of the remaining office supplies at the end of the year indicates that there is only $2,750 of supplies left. Make the adjustment to account for the used up supplies. 8. Depreciation on the building is based in n a useful life of 40 years and no salvage value. 9. The short term investment purchased on 7/1 for $40,000 at an annual interest rate of 7.50%. Accrue the interest earned. The interest will be revived next year. 10. Salaries incurred and paid is $155,000. Salaries incurred but unpaid is $15,000 Total salaries for the year is $170,000 11. The insurance at the beginning of the year is prepared for four years. At the end of the current year, one years's worth has expired. Record the adjustment for the used up insurance amount. The adjustment to bad debt expense should be based on a + desired ending balance in the Allowance for Doubtful Accounts account of 10% of the ending A/R balance (hint: there is already a balance in the Allowance Account) 144,364 40,000 385,500 2,0 + The annual interest rate on the note payable is 9.50%. The note has been outstanding for the entire year (for the amount of the note, see the beginning balance) 144,364 40,000 385,500 2,00 + A count of the remaining office supplies at the end of the year indicates that there is only $2,750 of supplies left. Make the adjustment to account for the used up supplies. 144,364 40,000 385,500 2,000 144,364 40,000 385,500 2,000 -) Depreciation on the Building is based on a useful life of 40 years and no salvage value. 144,364 40,000 385,500 The short-term investment purchased on 7/1 for $40,000 at an annual interest rate of 7.50%. Accrue the interest eared. The interest will be received next year. 2,0 144,364 40,000 385,500 2,0 Salaries incurred and paid is $155,000 Salaries incurred but unpaid is $15,000 385,5 Total salaries for the year is $170,000 144,364 40,000 385,50 The insurance at the beginning of the year is prepaid for four years. At the end of the current year, one year's worth has expired. Record the adjustment for the used up insurance amount. 2,0 144,364 40,000 385,500 2,00 Adj. #1 #2 #3 #4 #5 #6 #7 #8 #9 #10 #11 Adjusting entries (see comments - cells with small red triangles in upper right corner) place mouse here to see comment place mouse here to see comment place mouse here to see comment place mouse here to see comment place mouse here to see comment place mouse here to see comment place mouse here to see comment place mouse here to see comment place mouse here to see comment place mouse here to see comment place mouse here to see comment Balances 90,000 35,000 (8,000) ASSETS Accounts Cash Short-term Investments Accounts Receivable Allowance for Doubtful Accounts Interest Receivable Office Supplies Merchandise Inventory Prepaid Insurance Land Building Accumulated Depreciation -- Building Equipment Accumulated Depreciation - Equipment Intangible Asset - Patent Accounts Payable Salaries Payable Income Taxes Payable Uneamed Revenue Dividends Payable Interest Payable Notes Payable Common Stock Additional Paid-in Capital Retained Eamings Sales Revenue Sales Discounts Sales Allowances Service Revenue Interest Income Cost of Goods Sold Advertising Expense Office Supplies Expense Salaries Expense Utilities Expense Insurance Expense Bad Debt Expense Depreciation Expense Amortization Expense Miscellaneous Expense Interest Expense Income Tax Expense 2,000 32,000 40,000 50,000 300,000 (60,000) 400,000 (50,000) 25,000 40,000 25,000 35,000 35,000 20.000 22,500 300,000 100,000 180.000 98,500 LIABILITIES EQUIT REVENUES EXPENSES