90.2K

Verified Solution

Link Copied!

Vita Dental Agencies current fiscal year ended on December 31, 2018. For the year then ended, the company has reported an unadjusted net income of $100,000. The owner has some doubt about this figure and has asked you to review his accounting records.

Required: Make adjusting entries as at December 31, 2018 for the following information uncovered in your review (show your calculations for full marks):

a) Vita occupied their new building for the first time on May 1, 2018. The building has an estimated 15-year useful life and annual amortization is 40,000. No amortization has been recorded for 2018.

b) The Dental Supplies account showed an opening balance of $1,900 on January 1, 2018. During the year, the owner used Dental Supplies asset account to record the purchase of another $2,985 of supplies. The year-end physical count of office supplies inventory only showed $0 unused Dental Supplies on hand.

c) The Prepaid Insurance account showed an opening balance on January 1^st, 2018 of $1,200 representing the 3 months remaining on a 1-year insurance policy bought on April 1, 2017. At the expiration of this policy on March 31, 2018, the owner paid $6,000 for another 1 year policy. At year end, the accounting manager incorrectly debited Insurance Expense instead of Prepaid Insurance to record the purchase of this renewal on March 31, 2018.

Answer & Explanation Solved by verified expert

See Answer