# Sample Problem Chapter 5  Calculating adjustments. Determine the necessary end-of-June adjustments for Carlson Company. 1.On June 1, 2007, Carlson Company,

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Sample Problem Chapter 5

 Calculating adjustments. Determine the necessary end-of-June adjustments for Carlson Company. 1.On June 1, 2007, Carlson Company, a new firm, paid \$9,000 rent in advance for a six-month period. The \$9,000 was debited to the Prepaid Rent account. 2.On June 1, 2007, the firm bought supplies for \$2,375. The \$2,375 was debited to the Supplies account. An inventory of supplies at the end of June showed that items costing \$900 were on hand. 3.On June 1, 2007, the firm bought equipment costing \$27,000. The equipment has an expected useful life of 10 years and no salvage value. The firm will use the straight-line method of depreciation.

1. On June 1, 2007, Carlson Company, a new firm, paid \$9,000 rent in advance for a six month period. The \$9,000 was debited to the Prepaid Rent account. Determine the end-of-June adjustment Debit Rent Expense \$1,500 Debit Rent Expense \$1,500 Credit Prepaid Rent \$1,500 Credit Prepaid Rent \$1,500 \$9,000/6 months = \$1,500 month rent expense

2. On June 1, 2007, the firm bought supplies for \$2,375. The \$2,375 was debited to the Supplies account. An inventory of supplies at the end of June showed that items costing \$900 were on hand. Determine the end of June adjustment. Debit Supplies Expense \$1,475 Debit Supplies Expense \$1,475 Credit Supplies \$1,475 Credit Supplies \$1,475 \$2,375 - \$900 = \$1,475

3. On June 1, 2007, the firm bought equipment costing \$27,000. The equipment has an expected useful life of 10 years and no salvage value. The firm will use the straight line method of depreciation. Determine the end-of-June adjustment. Debit Depreciation Expense \$225 Debit Depreciation Expense \$225 Credit Accumulated Depreciation \$225 Credit Accumulated Depreciation \$225 [\$27,000 – 0(no salvage value)]/10 years = \$2,700/year. \$2,700/12 months = \$225 month

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