(Learning Objective 2, 3: Allocating supplies cost to the asset and the expense) Bird-Kultgen, Inc., experienced four situations for its supplies. Compute the amounts indicated by question marks for each situation. For situations 1 and 2, journalize the needed transaction. Consider each situation separately.
(Learning Objective 3: Journalizing adjusting entries) Clark Motor Company faced the following situations. Journalize the adjusting entry needed at December 31, 20X6, for each situation. Consider each fact separately.
a. The business has interest expense of $9,000 that it must pay early in January 20X7.
b. Interest revenue of $3,000 has been earned but not yet received.
c. On July 1, when we collected $3,000 rent in advance, we debited Cash and credited Unearned Rent Revenue. The tenant was paying us for 2 years’ rent.
d. Salary expense is $1,000 per day—Monday through Friday—and the business pays employees each Friday. This year, December 31 falls on a Tuesday.
e. The unadjusted balance of the Supplies account is $3,100. The total cost of supplies on hand is $800.
f. Equipment was purchased at the beginning of this year at a cost of $60,000. The equipment’s useful life is 5 years. Record depreciation for this year and then determine the equipment’s book value.
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