Prepare the annual year-end adjusting entries indicated by the additional data. 2 answers below »

Hillside Apartments, Inc., adjusts and closes its books each December 31. Assume the accounts for all prior years have been properly adjusted and closed. Following are some of the company’s account balances prior to adjustment on 2010 December 31:

HILLSIDE APARTMENTS, INC.
Partial Trial Balance
2010 December 31  

Debits

Credits

Prepaid insurance

$7,500  

Supplies on hand

7,000  

Buildings

255,000  

Accumulated depreciation – Buildings  

$96,000

Unearned rent  

2,700

Salaries expense

69,000  

Rent revenue  

277,500

The Prepaid Insurance account balance represents the remaining cost of a four-year insurance policy dated 2011 June 30, having a total premium of USD 12,000.

The physical inventory of the office supply stockroom indicates that the supplies on hand cost USD 3,000.

The building was originally acquired on 1994 January 1, at which time management estimated that the building would last 40 years and have a residual value of USD 15,000. Salaries earned since the last payday but unpaid at December 31 amount to USD 5,000.

Interest earned but not collected on a savings account during the year amounts to USD 400.

The Unearned Rent account arose through the prepayment of rent by a tenant in the building for 12 months beginning 2010 October 1.

Prepare the annual year-end adjusting entries indicated by the additional data.

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