Items concerning the accounts of the Doolittle Company for t…
Items concerning the accounts of the Doolittle Company for the current year are described below. Prepare a December 31 year-end adjusting entry for each item, or indicate that an adjusting entry is not necessary. Assume that transactions were initially recorded in real (balance sheet) accounts unless otherwise indicated. On July 1, a two-year comprehensive insurance policy was purchased for $1,200. The payment was debited to prepaid insurance. On January 1, the Office Supplies account had a $250 balance. Supplies costing $1,000 were purchased during the year. At December 31, an inventory count showed $300 of supplies on hand. As of December 31, $3,750 of employee salaries had been earned but not paid. No entry for these unpaid salaries was previously recorded. Straight-line depreciation is used for a building purchased 5 years ago for $30,000, with an expected life of 30 years and an estimated residual value of $3,000. Entries to record depreciation were made each month through November. The income tax rate is 30% on current income. Pretax income before the above adjusting entries was $17,075.