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Prepare adjusting entries for Penny’s Pool Service & Supply, Inc.
Prepare adjusting entries for Penny’s Pool Service & Supply, Inc.Trial Balance on December 31 (the end of the first year of operations)
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a. PPSS owed $7,500 in wages to the office receptionist and three assistants for working the last 10
days in December. The employees will be paid early next year.
b. On October 1 of the current fiscal year. PPSS received $24,000 from customers who prepaid
pool cleaning service for one year beginning on November 1 of the current year.
c. The company received a $520 utility bill for December utility usage. It will be paid early next
year.
d. PPSS borrowed $79,000 from a local bank on August 1, signing a one-year, 12 percent note. The
note and interest are due on august 1 next year, Round to the nearest dollar.
e. On December 31, PPSS cleaned and winterized a customer’s pool for $800, but the service was
not yet recorded on December 31.
f. On November 1 of the current fiscal year, PPSS purchased a two-year insurance policy for
$4,200, with coverage beginning on that date. The amount was recorded as Prepaid Expenses
when paid.
g. On December 31, PPSS had $3,100 of pool cleaning supplies on hand after purchasing supplies
costing $25,400 during the year from Pool Corporations, Inc.
h. PPSS estimated that depreciation on its buildings and equipment was $8,300 for the year.
i. On December 31, $110 of interest on investments was earned that will be received in the next
year.
j. The company’s income tax rate for the year was 22 percent. Round to the nearest dollar.
To prepare the adjusting entries forPenny's Pool Service & Supply, Inc.,we need to consider the given information and make the necessary adjustments. The adjusting entries are as follows:a. Wages Payable:Wages Expense $7,500Wages Payable $7,500(To record wages owed to employees for December)b. Unearned Revenue:Cash $24,000Unearned Revenue $24,000(To record the prepaid pool cleaning service for one year)c. Accrued Expenses:Utilities Expense $520Utilities Payable $520(To record utility expense for December)d. Accrued Interest Expense:Interest Expense $9,480Interest Payable $9,480(To record accrued interest on the bank note)e. Service Revenue:Service Revenue $800Accounts Receivable $800(To record the revenue for the pool cleaning service)f. Insurance Expense:Insurance Expense $1,050Prepaid Expenses $1,050(To record the insurance expense for the current year)g. Supplies Expense:Supplies Expense $22,300Supplies Inventory $22,300(To record the supplies used during the year)h. Depreciation Expense:Depreciation Expense $8,300Accumulated Depreciation $8,300(To record depreciation on buildings and equipment)i. Interest Receivable:Interest Receivable $110Interest Revenue $110(To record interest earned on investments)j. Income Tax Expense:Income Tax Expense $xIncome Tax Payable $x(To record income tax expense based on the income tax rate)Theincome tax expensecannot be determined without knowing the net income or taxable income of the company. The amount should be calculated based on the given income information.These adjusting entries will ensure that thefinancial statementsreflect the correct amounts for the year-end balances and the recognition of expenses, revenues, and other items.Learn more aboutfinancial statementsherebrainly.com/question/30355441#SPJ11...