Nickleby’s Ski Store is completing the accounting process for
its first year ended December 31, 2017. The transactions during
2017 have been journalized and posted. The following data are
available to determine adjusting journal entries:
- The unadjusted balance in Office Supplies was $1,150 at
December 31, 2017. The unadjusted balance in Supplies Expense was
$0 at December 31, 2017. A year-end count showed $160 of supplies
on hand.
- Wages earned by employees during December 2017, unpaid and
unrecorded at December 31, 2017, amounted to $6,100. The last
paycheques were issued December 28; the next payments will be made
on January 6, 2018. The unadjusted balance in Wages Expense was
$52,000 at December 31, 2017.
- A portion of the store’s basement is now being rented for
$1,700 per month to K. Frey. On November 1, 2017, the store
collected six months’ rent in advance from Frey in the amount of
$10,200. It was credited in full to Deferred Rent Revenue when
collected. The unadjusted balance in Rent Revenue was $0 at
December 31, 2017.
- The store purchased delivery equipment at the beginning of the
year. The estimated depreciation for 2017 is $9,000, although none
has been recorded yet.
- On December 31, 2017, the unadjusted balance in Prepaid
Insurance was $7,200. This was the amount paid in the middle of the
year for a two-year insurance policy, with coverage beginning on
July 1, 2017. The unadjusted balance in Insurance Expense was
$1,100, which was the cost of insurance from January 1 to June 30,
2017.
- Nickleby’s store did some ski repair work for Frey. At the end
of December 31, 2017, Frey had not paid for work completed,
amounting to $1,050. This amount has not yet been recorded as
Repair Shop Revenue. Collection is expected during January
2018.
Required:
Earlier in 2017, Nickleby’s store had already provided, recorded,
and collected cash for $8,000 of repair services for other
customers.
1. For each of the items listed above, indicate
the account names and adjusted balances that should be reported on
Nickleby’s year-end balance sheet and income statement.
For each situation, prepare the adjusting journal entry that
should be recorded for Nickleby’s at December 31, 2017. (If
no entry is required for a transaction/event, select "No journal
entry required" in the first account field.)