For each of the following situations, record the entries necessary to adjust the accounts at the end of the year. Use T-accounts.
a. Wages of $1,100 have not yet been recorded. This is for labor services performed during the last three days of the year, for which payment will be made on the first payday of next year.
b. The Prepaid Insurance account has a balance of $1,200. An analysis of the insurance contracts indicates that the amount of premiums applicable to future years is $750 as of December 31.
c. Six months’ interest on $200,000 of 12 percent bonds outstanding (a liability) has not yet been recognized.
d. Six months’ interest of $8,000 on government securities held as an investment has not yet been recognized.
e. The Prepaid Rent account has a balance of $1,500 before making adjusting entries. Analysis indicates that rent of $300 is owed as of the date of closing.