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Prepare adjusting journal entries.

a. On June 1, 2018 a 24-month insurance policy was purchased for $36,000. (Note: The insurance policy is consumed for 7 months from June 1 to December 31 in 2018.)

b. On January 1, 2018 Hullie & Oates paid Gretsky Advertising $48,000 for three years of advertising services. Equal services are provided each year.

c. Hullie & Oates needed some additional storage space so on November 1, 2018 they rented a unit for an annual rate of $18,500. The entire amount was expensed when paid.

d. $5,800 of store supplies were purchased during the year and the asset store supplies was increased. $3,000 of these supplies were used during the year.

e. Depreciation for the year is based on straight line depreciation methodfor the following:

e1. Store equipment Assets were held for the entire year; Residual Value = $10,000; Useful life is estimated to be 10 years.

e2. Office equipment Assets were held for the entire year; Residual Value = $7,000; Useful life is estimated to be 2 years.

f. Sales salaries of $8,400 and office salaries of $6,500 remained unpaid at 12/31/18, which have not been recorded for the year. (Note: In the adjusting journal entry, increase Sales Salaries Expense, Office Salaries Expense, and Salaries Payable.)

g. The note payable was outstanding the entire year and a 5.5% interest rate (annual) exists on the note. No interest has been recorded for the year.

h. Based on past experience, Hullie & Oates calculates bad debt expense at 1% of net salesfor the year.

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