Practice Problems
Complete these practice problems. Check your answers after you finish.
Demonstration problem
Among other items, the trial balance of Korman Company for 2010 December 31, includes the following account balances:
| Debits |
Credits | |
| Supplies on Hand | $6,000 | |
| Prepaid Rent | 25,200 | |
| Buildings | 200,000 | |
| Accumulated Depreciation – Buildings | $33,250 | |
| Salaries Expense | 124,000 | |
| Unearned Delivery Fees |
4,000 |
Some of the supplies represented by the USD 6,000 balance of the Supplies on Hand account have been consumed. An inventory count of the supplies actually on hand at December 31 totaled USD 2,400.
On May 1 of the current year, a rental payment of USD 25,200 was made for 12 months' rent; it was debited to Prepaid Rent.
The annual depreciation for the buildings is based on the cost shown in the Buildings account less an estimated residual value of USD 10,000. The estimated useful lives of the buildings are 40 years each.
The salaries expense of USD 124,000 does not include USD 6,000 of unpaid salaries earned since the last payday.
The company has earned one-fourth of the unearned delivery fees by December 31.
Delivery services of USD 600 were performed for a customer, but a bill has not yet been sent.
a. Prepare the adjusting journal entries for December 31, assuming adjusting entries are prepared only at year-end.
b. Based on the adjusted balance shown in the Accumulated Depreciation – Buildings account, how many years has Korman Company owned the building?
Source: Textbook Equity, https://learn.saylor.org/pluginfile.php/41229/mod_resource/content/8/AccountingPrinciples.pdf
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