A review of the ledger of Crane Corporation at its year end, October 31, 2024, produces the following unadjusted data for the preparation of annual adjusting entries:
1. Prepaid Advertising, October 31, 2024, unadjusted balance, $10,080: On February 1, 2024, the company signed and prepaid $10,000 for a 12-month advertising contract for advertisements to run in a trade magazine that publishes monthly, with the first advertisement appearing on March 1.
2. Deferred Revenue, October 31, 2024, unadjusted balance, $174,000: The company began subleasing office space in its new building on September 1, 2024. At October 31, the company had five one-year contracts for rental space, signed September 1 at a monthly rent of $5,800. All five tenants paid six months' rent in advance on September 1 for the 12-month rental.
3. Bank Loan Payable, October 31 unadjusted balance, $111,000: This represents a one-year, 8% bank loan signed on April 1, 2024. Interest is payable at maturity.
4. Vehicles, October 31, 2024, unadjusted balance, $47,400: The company owns a vehicle, purchased for $47,400 on April 1, 2023. The vehicle has a five-year useful life and the company uses straight-line depreciation.
(a1) How much advertising expires per month?
Advertising expires per month $
(a2) How much should the adjusted balance in the Prepaid Advertising account be at October 31?
Adjusted balance in the prepaid advertising account $
(b2) How much should the adjusted balance in the Deferred Revenue account be at October 31?
Adjusted balance in the deferred revenue account $
(c1) How much is interest on the bank loan each month?
Interest on the bank loan each month $
(c2) How much interest is owed, if any, on October 31, 2024?
Interest owed $
(c3) How much interest will be paid on April 1, 2025, when the bank loan matures?
Interest paid $
(d1) How much is annual depreciation expense?
Annual depreciation expense $
(d2) Calculate the unadjusted balance in the Accumulated Depreciation account as at October 31, 2024.
Unadjusted balance in the Accumulated Depreciation account $
(d3) How much should the adjusted balance in the Accumulated Depreciation account be at October 31, 2024?
Adjusted balance in the Accumulated Depreciation account $
(e) Prepare the adjusting journal entries required for each of the above four items at October 31, 2024. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round all amounts to the nearest dollar. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries.)
No. Date Account Titles and Explanation Debit Credit
1. Oct. 31 Advertising Expense
Prepaid Advertising
2. Oct. 31 Deferred Revenue
3. Oct. 31 Interest Expense
Interest Payable
4. Oct. 31 Depreciation Expense
Accumulated Depreciation - Vehicles
