Prepare journal entries to adjust the books of McGarrett Cor

Prepare journal entries to adjust the books of McGarrett Corp. at December 31,

2013.

-Purchased Machine B used in the factory for $450,000 on July 1, 2010. Machine B has an estimated useful life of 12 years and a residual value of $30,000. McGarrett uses straight-line depreciation.

-Sales for 2013 amounted to $4,000,000, including $600,000 of sales on credit. Bad debt losses are estimated based on actual experience to be .25% of credit sales.

-The dollar value of office supplies inventory at the beginning of 2013 equaled $600. During 2013, office supplies costing $8,800 were purchased. This amount was debited to office supplies expense. The dollar value of the ending inventory was determined to be $400. The January 1 balance of $600 still appears as the balance in the office supplies inventory account.

-On July 1, 2013, the company paid a three-year insurance premium in the amount of $2,160. This amount was debited to insurance expense.

-On October 1, 2013, the company paid rent on some leased office space. The payment of $7,200 cash was for the following six months. The $7,200 payment was debited to rent expense

Can you add side notes for each journal entry please!!

Solution

Date Account Titles & Explanation Debit Credit 31-Dec-13 Depreciation Expense 35000         To Accumulated Depreciation 35000 (Being Depreciation on machinery has been recorded) Deprecaition expenses   = ($450,000-$30,000) /12 =$35000 31-Dec-13 Bad debt Expense A/c 1500           To Allowance for Doughtful accounts 1500 (Being Estimated bad debts has been recorded) Bad debts Expenses =$600,000*0.25% =$1500 31-Dec-13 Office Supplies Expense A/c 200          To office supplies Invenory A/c 200 (Being office supplies used from Opening balance has been recorded has expenses $600-$400=$200) 31-Dec-13 Prepared Insurance 1800       To Insurance Expense A/c 1800 (Being unexpired Insurance has been transferred to prepaid Insurance $2160*2.5 Years /3) 31-Dec-13 Prepaid rent A/c 3600        To Rent Expense A/c 3600 (Being 3 Months rent Transferred to prepared $7200*3/6)