Question

Rusty Ladd began his auto repair garage in January of 2013. It is now December 31,...

Rusty Ladd began his auto repair garage in January of 2013. It is now December 31, 2014, and RUSTY’S AUTO GARAGE has completed its second year of business. The bookkeeper, one Ms. Ladd, has provided you with the unadjusted trial balance shown below: In discussion with Ms. Ladd over a hot chocolate with lots of whipped cream, you discover the following about the business: 1. The auto mechanic earns $1,000 for every 5-day work week (Monday through Friday). He was last paid on Friday December 27, 2014. He will not be paid for the additional days worked in December until January, 2015. 2. Computer equipment was purchased on January 28, 2013 for $14,000. The business plans to use the computer equipment for 4 years, at which time its salvage value is expected to be $2,000. In the year that a capital asset is purchased, depreciation is recorded to the nearest whole month using the straight-line method. 3. A bill for repairs to the furnace on December 28, 2014 of $500 was received on January 10, 2015, but was not paid or recorded in the unadjusted trial balance dated December 31, 2014. 4. Insurance costing $2,400 was purchased on March 1, 2014 for the period March 1, 2014 through the end of February, 2015. The insurance for March 1, 2013 through February 28, 2014 had a cost of $1,800. 5. Rusty’s auto garage purchased the computer equipment with cash of $4,000 and a note payable. The note payable will be paid out in 2016. The note payable has an interest rate of 8% per year. Interest is accrued in 6 month periods (January - June, then July - December) and then paid within 30 days of the end of each 6-month period. 6. Shop supplies were counted at December 31, 2013 and had a cost value of $1,200. Shop supplies in the amount of $3,700 were purchased during 2014. Shop supplies were counted at December 31, 2014 with an amount of $800. UNADJUSTED TRIAL BALANCE ACCOUNT TITLES DEBIT CREDIT Royal Bank account $20,201.00 Temporary investment 10,000.00 Accounts receivable 18,569.00 Shop supplies 1,200.00 Prepaid insurance 300.00 Prepaid rent 3,000.00 Computer equipment 14,000.00 Accumulated dep, computer $2,750.00 Accounts payable 1,880.00 Unearned auto repair fees 6,000.00 Long term note payable 10,000.00 Capital - Rusty Ladd 41,000.00 Withdrawals - Rusty Ladd 13,950.00 Auto repair fees earned 98,000.00 Insurance expense 2,400.00 Interest expense 400.00 Office supplies expense 5,000.00 Shop supplies expense 3,700.00 Rent expense 8,000.00 Telephone expense 2,410.00 Utilities expense 5,500.00 Wages expense 51,000.00 $159,630.00 $159,630.00 REQUIRED Prepare adjusting journal entries in proper general journal form for the above 6 situations in the answer boxes below. Provide a date and explanation for each entry .

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