Third Avenue Grill, an upscale restaurant on the beach, has just completed its first full year of operations on December 31, 2016. It provides meals both in its restaurant and catering. Selected balances from its general ledger before year-end adjustments follow. (All balances are normal.)
An analysis of the firm's records reveals the following.

1. The balance in Prepaid Advertising represents the amount paid for newspaper advertising for one year. The agreement, which calls for the same amount of space each month, covers the period from February 1, 2016, to January 31, 2017. Third Avenue Grill did not advertise during its first month of operations.
2. Equipment purchased January 1, 2016, has an estimated life of eight years.
3. Utilities expense does not include the expense for December, estimated at $ 1,000. The bill will not arrive until January, 2016.
4. At year-end, employees have earned $12,800 in wages that will not be paid until January.
5. Supplies available at year-end amounted to $2,600.
6. At year-end, unpaid interest of $ 480 has accrued on the notes payable.
7. The firm's lease calls for rent of $2,000 per month payable on the first of each month, plus an amount equal to 2% of annual sales. The rental percentage is payable within 15 days after the end of the year.
Prepare adjusting entries in journal entry form.

Question

Third Avenue Grill, an upscale restaurant on the beach, has just completed its first full year of operations on December 31, 2016. It provides meals both in its restaurant and catering. Selected balances from its general ledger before year-end adjustments follow. (All balances are normal.)
  An analysis of the firm's records reveals the following.
 
1. The balance in Prepaid Advertising represents the amount paid for newspaper advertising for one year. The agreement, which calls for the same amount of space each month, covers the period from February 1, 2016, to January 31, 2017. Third Avenue Grill did not advertise during its first month of operations.
2. Equipment purchased January 1, 2016, has an estimated life of eight years.
3. Utilities expense does not include the expense for December, estimated at $ 1,000. The bill will not arrive until January, 2016.
4. At year-end, employees have earned $12,800 in wages that will not be paid until January.
5. Supplies available at year-end amounted to $2,600.
6. At year-end, unpaid interest of $ 480 has accrued on the notes payable.
7. The firm's lease calls for rent of $2,000 per month payable on the first of each month, plus an amount equal to 2% of annual sales. The rental percentage is payable within 15 days after the end of the year.
Prepare adjusting entries in journal entry form.

Quizplus · Accepted Answer

The Answer of Third Avenue Grill, an upscale restaurant on the beach, has just completed its first full year of operations on December 31, 2016. It provides meals both in its restaurant and catering. Selected balances from its general ledger before year-end adjustments follow. (All balances are normal.)
  An analysis of the firm's records reveals the following.
 
1. The balance in Prepaid Advertising represents the amount paid for newspaper advertising for one year. The agreement, which calls for the same amount of space each month, covers the period from February 1, 2016, to January 31, 2017. Third Avenue Grill did not advertise during its first month of operations.
2. Equipment purchased January 1, 2016, has an estimated life of eight years.
3. Utilities expense does not include the expense for December, estimated at $ 1,000. The bill will not arrive until January, 2016.
4. At year-end, employees have earned $12,800 in wages that will not be paid until January.
5. Supplies available at year-end amounted to $2,600.
6. At year-end, unpaid interest of $ 480 has accrued on the notes payable.
7. The firm's lease calls for rent of $2,000 per month payable on the first of each month, plus an amount equal to 2% of annual sales. The rental percentage is payable within 15 days after the end of the year.
Prepare adjusting entries in journal entry form.

Third Avenue Grill, an Upscale Restaurant on the Beach, Has