| There are 10 applicable adjusting entries that need to be made as of the end of the month based on the information provided above. When recording these adjusting entries consider the following facts: 1.) Interest expense will be recorded as a operating expense items on the income statement. 2.) Record the necessary adjusting entries related to pre-paid expense as separate journal entries. 3.) When reviewing the supply room as of the end of the month, Mason Automation noted that it had $2.5 Million worth of supplies still on hand. 4.) As of the end of the month, 3,000 cars were completed for Michael Scott Paper Company and the performance obligation had been met on those 3,000 cars. As such, revenue was determined to be earned on those 3,000 vehicles and it was noted that each vehicle costed $5,000 to manufacture. 5.) Mason Automation uses the balance sheet approach in estimating the allowance for doubtful accounts as of the end of the period. Based on industry average, Mason noted that it will use 3% of receivables as an estimation. 6.) When preparing the balance sheet, close out net income to retained earnings. | 
