Problem 1: (Adjusting entries 3 — points eacl 1. Gomez Company received $9,600 on April 1, 2004 for one year's rent in advance and recorded the transaction with a credit to a nominal account. The December 31, 2004 adjusting entry is Forbes Company paid $7,200 on June 1, 2004 for a two-year insurance policy and recorded the entire amount as Insurance Expense. The December 31, 2004 adjusting entry is Lane Company purchased equipment on November 1, 2004 and gave a 3-month, 9% note with a face value of $50,000. ‘The December 31, 2004 adjusting entry is Perez Corporation received cash of $9,000 on August 1, 2004 for one year’s rent in advance and recorded the transaction with a credit to Rent Revenue. The December 31, 2004 adjusting entry is Lane Corporation has an incentive commission plan for its salesmen, entitling them to an additional sales commission when actual quarterly sales exceed budgeted estimates. An analysis of the account "incentive commission expense” for the year ended December 31, 2004, follows. For Quarter Ended Date Paid __ December 31, 2003 January 23, 2004 March 31, 2004 April 24, 2004 39,000 June 30, 2004 July 19, 2004 43,000 September 30, 2004 October 22, 2004 The incentive commission for the quarter ended December 31, 2004, was $45,000. This amount was recorded and paid in January 2005. What amount should Lane report as incentive commission expense for 2004?In November and December 2004, Mann Co., a newly organized magazine publisher, received $75,000 for 1,000 three-year subscriptions at $25 per year, starting with the January 2005 issue. What amount should Mann report in its 2004 income statement for subscriptions revenue? Dolan Co. pays all salaried employees on a biweekly basis. Overtime pay, however, is paid in the next biweekly period. Dolan accrues salaries expense only at its December 31 year end. Data relating to salaries eamed in December 2004 are as follows: Last payroll was paid on 12/26/04, for the 2-week period ended 12/26/04, Overtime pay eamed in the 2-week period ended 12/26/04 was $5,000. Remaining work days in 2004 were December 29, 30, 31. on which days there was no overtime. The recurring biweekly salaries total $90,000. Assuming a five-day work week, Dolan should record a liability at December 31, 2004 for accrued salaries of Jim Wynn, M.D., keeps his accounting records on the cash basis. During 2004, Dr. Wynn collected $180,000 from his patients. At December 31, 2003, Dr. Wynn had accounts receivable of $25,000. At December 31, 2004, Dr. Wynn had accounts receivable of $35,000 and unearned revenue of $5,000. On the accrual basis, how much was Dr. Wynn's patient service revenue for 2004? 9. The Supplies account shows a balance of $540, but a count of supplies reveals only $210 on hand. 10. Flint Hills initially records the payments of all insurance premiums as expenses. The trial balance shows a a balance of $420 in Insurance expense. A review of insurance policies reveals that $125 of insurance is unexpired. Plint Hills! employees work Monday through Friday, and salar s of $2,400 per week are paid each Friday. Flint Hills’ year-end falls on Tuesday. 12. On December 31, 2009, Flint Hills received a utility bill for December electricity usage of $190 that will be paid in early January.B] 12 points. The following adjusted trial balance was taken from the books of Clive Corporation on December 31,2003, ‘Account Debit Credit Cash 10,000 Sales 293,000 | Sales Discounts 4,000 Interest Revenue 2,000 Purchases 231,000 | Accounts Receivable 40,000 | Note Receivable 27,000 ‘Allowance of Doubtfl accounts 1,400 Inventory, January 1, 2003 51,000 Insurance 4,800 Furmiture and Equipment 120,000 Accumulated Depreciation of Fur. 15,000 Accounts Payable 10,400 Common Stock 66,000 Retained Earnings 75,000 Dividends 12,000 Purchases Returns and Allowances 3,000 Freight-In 2,000 Salaries Expense 50,000 Insurance Expense 2,000 | Depreciation Expense 2,000 a | Totals $465,800 $465,800 ‘A physical count of the inventory of Clive Corporation taken on December 31, 2003, showed that $87,500 of . ‘merchandise was on hand. Using the information given in the adjusted trial balance, present in proper format the five closing journal entries for Clive Corporations Questions =2 points each 1 6, What is the balance in Retained Barnings after the closing entries are posted? $