The UNADJUSTED trial balance for Day, Inc., as at December 31, 2019. is presented below: Dr. . Cash 194.800 Accounts receivable 168,000 620.000 Merchandise inventory Supplies inventory Prepaid insurance 6,800 36,000 Land 120,000 Building 280.000 Accumulated depreciation - building 80,000 Accounts payable 66,000 Note payable, due Dec 31, 2021 200,000 Common shares 140,000 Retained earnings, January, 1. 2019 227.900 Sales revenue 1.122.000 Supplies expense 12.800 Salaries expense 355,000 Interest expense 7,500 Insurance expense 20.000 Rent expense 15,000 1.859,900 1.859.900 Required: For each of the pieces of additional information below, prepare in the space provided any adjusting journal entry necessary to bring the accounts up to date as at December 31, 2019. the fiscal year-end of Day, Inc. Please use the letters a to to clearly label your journal entries. a. A one-year property insurance policy that was renewed and paid on August 1, 2019 for $36,000, and the entire payment was debited to Prepaid Insurance. No entry to the account has been made since the renewal of the insurance policy (3 points) b. The building has an estimated useful life of 15 years. Day Inc. expects that the residual value of the building at the end of its useful life will be $40,000. Depreciation Expense has not yet been recorded for the current year (3 points). c. The Note Payable is for a loan of $200,000 negotiated with the Bank of Montreal in 2016. Day Inc. pays annual interest of 5% and interest is payable on April 1 and October 1 each year. No entry has been made to adjust the balance of Interest Expense since October 1, 2019 (3 points). d. On December 31, 2019, Day Inc. discovered that the unadjusted balance of Sales Revenue included $68,000 of customer pre-payments for Merchandise Inventory to be shipped on January 13, 2020 (2 points). e. In order to accommodate employees during its office building renovation, Day Inc. paid $15,000 to rent a temporarily office location from November 1, 2019 till January 31, 2020. The entire payment of $15,000 was made on October 31, 2019 and debited to Rent Expense (3 points). f. Based on preliminary computations, the firm estimates that Income Tax Expense for the year will be $136,000 (2 points). g. All purchases of supplies are charged (debited) to Supplies Expense. The balance in Supplies Inventory represents supplies on hand at the beginning of the year. A physical count on December 31, 2019, indicated supplies currently on hand of paid $15,000 to rent a temporarily office location from November 1, 2019 till January 31, 2020. The entire payment of $15,000 was made on October 31, 2019 and debited to Rent Expense (3 points) f. Based on preliminary computations, the firm estimates that Income Tax Expense for the year will be $136,000 (2 points). g. All purchases of supplies are charged (debited) to Supplies Expense. The balance in Supplies Inventory represents supplies on hand at the beginning of the year. A physical count on December 31, 2019. indicated supplies currently on hand of $9,300 (3 points)
