Wilson Corporation prepares monthly financial statements and therefore adjusts its accounts at the end of every month. For each of the following situations, identify and analyze the adjustments to be recorded on March 31, 2014. The following information is available for March 2014:
- Wilson Corporation takes out a 90-day, 8%, $15,000 note on March 1, 2014, with interest and principal to be paid at maturity.
- The asset account Office Supplies on Hand has a balance of $1,280 on March 1, 2014. During March, Wilson adds $750 to the account for purchases during the period. A count of the supplies on hand at the end of March indicates a balance of $1,370.
- The company purchased office equipment last year for $62,600. The equipment has an estimated useful life of six years and an estimated salvage value of $5,000.
- The company’s plant operates seven days a week with a daily payroll of $950. Wage earners are paid every Sunday. The last day of the month is Saturday, March 31.
- The company rented an idle warehouse to a neighboring business on February 1, 2014, at a rate of $2500 per month. On this date, Wilson Corporation recorded Rent Collected in Advance for six months’ rent received in advance.
- On March 1, 2014, Wilson Corporation recorded a liability account, Customer Deposits, for $4,800. This sum represents an amount that a customer paid in advance and the Wilson will earn evenly over a four-month period.
- Based on its income for the month, Wilson Corporation estimates that federal income taxes for March amount to $3,900.