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116 Chapter : Adjusting the Accounts LO 2,3 DEEWANGER ht ES REQUIRED An adjustments affect one balance sheet account and one income statement account For each of these situations, show the accounts affected, the amount of the adjustment (using + or - to indicate an increase or decrease), and the balance of the account after the adjustment in the following format: Balance Amount of Balance Income Amount of Balance Sheet Adjustment After Statement Adjustment After Account for-) Adjustment Account [+ or - Adjustment Preparing Adjusting Entries P2. On November 30, the end of the current fiscal year, the following information is available to assist Allerton Company's accountants in making adjusting entries 2. Allerton's Supplies account shows a beginning balance of $2,350. Purchases dur ing the year were $4,218. The end-of-year inventory reveals supplies on hand of $1.397 b. The Prepaid Insurance account shows the following on November 30 Beginning balance 54.720 July 1 4.200 October 1 7.272 The beginning balance represents the unexpired portion of a one-year policy purchased in September of the previous year. The July 1 entry represents a new one-year policy, and the October 1 entry represents additional coverage in the form of a three-year policy c. The following table contains the cost and annual depreciation for buildings and cquipment, all of which Allerton purchased before the current year: Account Cost Annual Depreciation Buildings $298.000 $16,000 Equipment 374,000 40.000 d. On October 1, the company completed negotiations with a client and accepted an advance of 518,600 for services to be performed monthly for a year. The $18.600 was credited to Uncanned Services Revenue e. The company calculated that, as of November 30, it had eamed 57,000 on an $11,000 contract that would be completed and billed in January Among the liabilities of the company is a note payable in the amount of $300,000 On November 30, the accrued interest on this note amounted to $18,000 & On Saturday, December 2, the company, which is on a six-day workweck, will pay its regular employees their weekly wages of $15,000 h. On November 29, the company completed negotiations and signed a contract to provide services to a new client at an annual rate of $23,000 REQUIRED 1 Prepare adjusting entries for each item listed abowe, 2. CONCEPT > Explain how the conditions for revenue recognition are applied to transactions e and h

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