Selected Transactions for Rosewood Industries Are Presented Below

Essay

Selected transactions for Rosewood Industries are presented below. The fiscal year end for the company is April 30. Net income prior to these adjustments is $43,670.
a. The company had purchased a 2-year insurance policy for $2,400 on January 1 and debited the prepaid insurance account. Insurance coverage begins on January 1.
b. Depreciation on equipment for the month was $600. Equipment was purchased on January 1 of the current year.
c. The company borrowed $15,000 on February 1 at 12% interest. Principal and interest are due on February 1 of the following year.
d. The unadjusted trial balance showed a balance in Supplies of $2,650. A month-end inventory showed $900 on hand.
e. The company loaned $8,000 to a customer on April 1. The note has an annual interest rate of 12% and is due along with accrued interest on March 31 of the following year.
f. Employees had earned $5,600 in salaries as of April 30. These salaries will be paid on May 3.
g. The unadjusted trial balance showed unearned revenues of $7,200. During April, $1,200 of these revenues were earned.
Required:
1. Prepare the necessary adjusting entries for Rosewood Industries as of April 30. Please include explanations.
2. Compute net income after these adjustments have been made.