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Analyzing Adjustments Information related to accounts requiring adjustment on the work
Chapter 18, Problem 18-2(choose chapter or problem)
Analyzing Adjustments
Information related to accounts requiring adjustment on the work sheet for the year ended December 31 for Star City Resorts Corporation follows. Indicate in your working papers the amount of each adjustment, which account is debited, and which account is credited.
1. The Trial Balance section shows a balance of $3,347.45 for Supplies. The amount of supplies actually on hand is $892.75.
2. Star City paid an annual insurance premium of $4,440 on November 1.
3. Star City made quarterly federal corporate income tax payments of $945 each. Its actual tax, calculated at the end of the year, is $3,885.
Questions & Answers
QUESTION:
Analyzing Adjustments
Information related to accounts requiring adjustment on the work sheet for the year ended December 31 for Star City Resorts Corporation follows. Indicate in your working papers the amount of each adjustment, which account is debited, and which account is credited.
1. The Trial Balance section shows a balance of $3,347.45 for Supplies. The amount of supplies actually on hand is $892.75.
2. Star City paid an annual insurance premium of $4,440 on November 1.
3. Star City made quarterly federal corporate income tax payments of $945 each. Its actual tax, calculated at the end of the year, is $3,885.
ANSWER:Step 1 of 2
Adjustments are made to update the balance of the temporary and permanent accounts of the business entity at the year-end. It is done by making journal entries at the year-end.