Western Lumber has a fiscal year ending December 31, 2018. For the year then ended, the company has reported an unadjusted net income of $531,000. The two owners have some doubt about this figure and have asked you to review the sawmills accounting records.

You are required to make adjusting journal entries at December 31, 2018 for the following information uncovered in your review (include dates, explanations and show all calculations). No adjusting entries had been made during the year.

a) Looking at the general ledger, the Supplies asset account showed an opening debit balance of $7,500 on January 1, 2018. During the year, Westerns accountant had recorded two very large purchases of Supplies, one in the amount of $41,666 on June 12, 2018 and $29,777 on October 29, 2018. The year-end physical count showed $13,711 of unused supplies on hand.

b) The Prepaid Insurance account showed a balance on January 1^st, 2018 of $8,000. This $8,000 represented 2 months left on a 2-year insurance policy which originally cost $96,000. At the expiration of this policy on March 1, 2018, Western paid $60,000 for another 1-year of insurance coverage. Prepaid Insurance was debited for the full amount of the purchase of this renewal policy.