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Waffles Desserts Ltd (WDL) is about to prepare its financial statements for 2020. They have a calendar year-end (December 31) and prepare to adjust entries on an annual basis. For each of the following situations, record the adjusting entry that would be made by the company on December 31, 2020.

On February 1, 2020, the company purchased equipment that cost $24,000 and had a useful life of six years. This was done by paying $4,000 cash and securing a $20,000 bank loan at a 5% interest rate. The company uses straight-line depreciation.

On February 1, 2020, WDL borrowed $80,000 from a bank. The loan bears interest at 6% and the first payment was made on August 1, 2020.

On January 1, 2020 the company had a balance in its supplies account of $1,400. During the year, supplies costing $800 were purchased. When this occurred, the debit was made to supplies expense. At the end of the year, it was determined that the supplies on hand was $850 At the beginning of 2020, WDL purchased a prepaid insurance policy that expired in 9 months. The policy purchased was $9,000. On October 1, 2020 WDL renewed the insurance policy, but this time for 18 months at a cost of $15,000.

At the end of 2020, it was determined that a food testing laboratory that WDL uses had performed some testing services for WDL but had not yet invoiced them for the work. WDL's accountant estimated that the testing fees payable by WDL to the laboratory at the end of 2020 amounted to $21,200 and had not yet been recorded.

Assume that the entry recorded in part (e) above had been reversed on January 1, 2015. In that case, redo the entry that would have been recorded in part (f).

On June 1, 2020 WDL purchased some equipment for $40,000 that had a residual value of $5,000. The equipment was expected to have a useful life of 5 years. On December 1, 2020 WDL found that the equipment was not performing as expected and decided to sell it for $35,500 cash.

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