For each of the following situations provide the necessary adjusting entries for Carberry Inc. (Carberry) for the year ended December 31, 2013. (These situations are tricky. When preparing each adjusting entry, compare what is recorded in the accounting system with what you think should be in the accounting system. Your adjusting entry should take the accounting system from

“what is” recorded to “what should be” recorded.)

a. On October 1, 2013, Carberry received $25,000 for goods it will produce and deliver to a customer. Carberry will deliver $5,000 of the goods each month beginning in November 2013. Carberry recorded the transaction by debiting cash and crediting revenue for $25,000.

b. On April 1, 2013, Carberry paid $25,000 cash for the right to use a vacant lot to store some of its equipment for the next two years. The company debited rent expense and credited cash for $25,000.

c. On February 15, 2013, Carberry received its quarterly natural gas bill covering the period November 1, 2012, to January 31, 2013. The accountant debited utilities expense—Natural Gas and credited cash for $2,400.