The following trial balance before adjustments is for Snowcrest Ltd on December 31, 2011:

Data for adjusting entries:
1. As of December 31, 2011, 80% of the commissions that had been paid in advance to the salespeople had been earned.
2. A count of the office supplies at the end of the year revealed that $600 of supplies were still on hand.
3. Depreciation on the equipment for 2011 was $1,000.
4. The deposits from customers were advance payments for future deliveries of goods. By December 31, 2011, two-thirds of these deliveries had been made.
5. The bank loan was a six-month loan taken out on October 1, 2011. The interest rate on the loan is 9%, but the interest is not due to be paid until the note is repaid on March 1, 2012.
6. Office salaries owed at year end and not yet recorded were $500.
7. The rent expense figure includes $600 paid in advance for January 2012.
8. Income tax for the year should be calculated using a tax rate of 25%.
Required:
Prepare the adjusting entries for the year 2011.

Transcribed Image Text:

Debit balances Credit balances Cash Inventory Advances to salespeople (prepaid sales commissions) Office supplies Equipment $ 10,000 24,000 2.000 3,000 56,000 Accumulated depreciation--equipment Deposits from customers revenue received in advance) Bank loan S 4,000 Share capital Retained earnings Sales revenue 6,000 20,000 40,000 9,000 230,000 Cost of goods sold Sales commissions Office salaries Rent expense Miscellaneous expenses Dividends declared Totals 130,000 34,000 25,000 6,600 15,000 3,400 $309,000 $309,000