The Mazzanti Wholesale Food Company's fiscal year-end is June 30. The company issues quarterly financial statements requiring the company to prepare to adjust entries at the end of each quarter. Assume all quarterly adjusting entries were properly recorded.1. On December 1, 2015, the company paid its annual fire insurance premium of $2,000 for the year beginning December 1.2. On August 31, 2015, the company borrowed $27, 500 from a local bank. The note requires principal and interest at 8% to be paid on August 31, 2016.3. Mazzanti owns a warehouse that it rents to another company. On January 1, 2016, Mazzanti collected $16,000 representing rent for the 2016 calendar year.4. Depreciation on the office building is $12,000 for the fiscal year.5. Employee salaries and wages for the month of June 2016 of $13,000 will be paid on July 20, 2016.Prepare the necessary year-end adjusting entries at the end of June 30, 2016, for the above situations.

Mazzanti Wholesale Food Company

Adjusting Entries on June 30:

Debit Insurance  Expense $1,167

Credit Prepaid Insurance $1,167

To record the insurance expense for two quarters and a month.

2.

Debit Interest on Note Expense $1,650

Credit Interest Payable $1,650

To record the interest expense for three quarters.

3.

Debit Cash $8,000

Credit Rent Receivable $8,000

To record rent received for the fiscal year.

4.

Debit Depreciation Expense $12,000

Credit Accumulated Depreciation $12,000

To record depreciation on office building for the year.

5.

Debit Salaries Expense $13,000

Credit Salaries Payable $13,000

To record salaries expense for the month of June, 2016.

Explanation:

a) Fire Insurance Premium Paid = $2,000

Insurance premium for the year = December to June = seven months

= $2,000/12 * 7 = $1,167

b) Interest on Bank Loan = ($27,500 * 8%)/12 * 9/12 = $1,650

c) Rent for 2016 calendar year = $16,000

Rent for 2016 fiscal year = January 1 to June 30 = 6 months

= $8,000 ($16,000/2)

c is the correct answer.

answer; the cpi;