The trial balance for Cozy Fireplaces Inc. for December 31, 2011, follows:

Additional information for adjusting entries:
1. The deposits from customers were for future deliveries. As of December 31, three-quarters of these goods had been delivered.
2. There is $2,000 in salaries and wages owed at year end.
3. Rent is paid in advance on the last day of each month. There was a balance of $3,000 in the prepaid rent account on January 1, 2011. At the end of January, $3,000 was paid for the February rent and was debited to the prepaid rent account. All the rent payments during the year were treated the same way. The rent for July to December increased to $4,000 per month.
4. A count of the office supplies at year end revealed that $500 of supplies were still on hand.
5. The building is being depreciated over 20 years with a residual value of $20,000.
6. The bank loan was taken out on April 1, 2011. The first interest payment is due on April 1, 2012.
7. Income tax for the year should be calculated using a tax rate of 30%. (Hint: After you finish the other adjusting entries, you will have to determine the income before income tax and then calculate the tax as 30% of this amount.)
Required:
Prepare the adjusting entries for the year 2011.

Transcribed Image Text:

Debit balances Credit balances Cash Accounts receivable Inventory Office supplies Prepaid rent Land Building Accumulated depreciation Accounts payable Salaries and wages payable Interest payable Income tax payable Deposits from customers (revenue received in advance) Bank loan, 9%, long-term Share capital Retained earnings Sales Cost of goods sold Salaries and wages Rent expense Office supplies used Depreciation expense Interest expense Miscellaneous expenses Income tax expense Dividends declared Totals $ 89,000 38,000 95.000 5,000 46,000 80,000 150,000 s 19,500 21,400 12,400 40,000 150,000 16,700 840,000 482,000 95,000 14.000 6,000 $1,100,000 $1,100,000