Waffles Desserts Ltd (WDL) is making its financial statements for 2023. They have a calendar year-end (December 31) and adjust entries on an annual basis. For each of the following situations, record the adjusting entry that would be made by the company on December 31, 2023.

On February 1, 2023 the company purchased equipment that cost $24,000 and had a useful life of six years. This was done by paying $4,000 cash and securing a $20,000 bank loan at a 5% interest rate. The company uses straight line depreciation.

On February 1, 2023 WDL borrowed $80,000 from a bank. The loan bears interest at 6% and the first payment was made on August 1, 2023.

On January 1, 2023 the company had a balance in its supplies account of $1,400. During the year, supplies costing $800 were purchased. When this occurred, the debit was made to supplies expense. At the end of the year, it was determined that the supplies on hand was $850

At the beginning of 2023, WDL purchased a prepaid insurance policy that expired in 9 months. The policy purchased was $9,000. On October 1, 2023 WDL renewed the insurance policy, but this time for 18 months at a cost of $15,000.

At the end of 2023, it was determined that a food testing laboratory that WDL uses had performed some testing services for WDL but had not yet invoiced them for the work. WDL's accountant estimated that the testing fees payable by WDL to the laboratory at the end of 2023 amounted to $21,200 and had not yet been recorded.

OnSeptember 1, the company hired an advertising firm to build them a website and design a logo. At the end of the year the logo had been designed which had an estimated cost of $300.

WDL did not receive an invoice from Enmax relating to their utilities for the month of December. WDL estimates the invoice will be approximately $900.

On the last day of the year, a contract was signed with a new customer for services to be performed in the future. A deposit of $4,500 was given.

Statement of changes in shareholders' equity for Sunshine Corporation on December 31, 2023.

Sunshine Corporation had the following balances at December 31, 2023 (in thousands):

preferred shares $3,012; common shares $4,718; contributed surplus $1,750;

retained earnings $16,791; and accumulated other comprehensive income $514.

During the year ended December 31, 2023,

the company earned net income of $3,613,000,

sold common shares of $30,000 and preferred shares of $5,000,

and paid out dividends of $14,000 and $5,000 to preferred and common shareholders, respectively.

Adjustment to correct error in prior years (gain net of tax $20,000) is 48,000

and Unrealized gains on FV-OCI equity investments (net of tax $34,000) is $82,000

Answer rating: 100% (QA)

February 1 2023 equipment purchase Debit Depreciation Expense 4000 for 6 mo... View the full answer