7.The following information is available on December 31, 2007, for Leonor Company:
a.Employees are owed $5,200 for wages they have earned but will not receive until the next regular payroll in ten days.
b.The Prepaid Insurance account has a $4,800 balance. This represents the premium paid on a 1-year policy on October 1, 2007.
c.Allocation of equipment cost for use during the year is estimated at $25,000.
Required:
For each situation above, indicate which account balances need adjustment, by what amount and in which direction. In each situation, list the appropriate income statement account first, followed by the balance sheet account.
8.The following information is available on December 31, 2007, for LaSalle Company:
a.A $20,000 note payable incurring $1,200 of interest has been outstanding the entire year. No interest has been paid or accrued to date.
b.On November 1, 2007 LaSalle received a $6,000 check from a tenant to cover the next three month's rent. It was recorded as unearned rent.
c.The supplies account has a $2,000 balance. A physical count indicates that $500 is on hand at year end.
Required:
For each situation above, indicate which account balances need adjustment, by what amount and in which direction. In each situation, list the appropriate income statement account first, followed by the balance sheet account.