Additional information about several transactions that occurred during the year:
a. Laundry services provided to hotels amounted to $7,500 in June. The client would pay on July 5.
b. A physical count of laundry supplies showed that there was $3,200 of cleaning supplies on hand on June 30. The balance of Laundry Supplies Expense, $7,800 on June 30, represents laundry supplies purchased during the year.
c. The balance of Prepaid Insurance represents one-year insurance premium paid on February 1.
d. Laundry machines were estimated to last for 8 years, with a salvage value of $2,000 at the end of the 8th year. No adjustment was made for this fiscal year.
e. Four workers each earned $60 day. Six days of wages were earned by employees, but not paid by June 30.
f. Seventy percent of the unearned revenue was earned in June.
g. On March 1, KLS borrowed $21,000 from the RBC bank by signing a three-year note with a 5% interest rate. KLS was required to make annual interest payments at the end of each year.
h. The utilities expense for June was estimated at $1,200. The utility bill usually arrived during the first week of the following month.
i. KLS’s income tax rate was 30%.
Requirements
1. Indicate the type of adjustments for each transaction.
2. Prepare the adjusting entry and enter the amount for each transaction in the worksheet.
3. Prepare the adjusted trial balance in the worksheet.
4. What is the age of the laundry machines?
5. Prepare the income statement, statement of retained earnings, and statement of financial position.
6. Record the adjusting entry for the income tax.