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Record the December 31 adjusting entries for the following transactions and events in general journal form. Assume that December 31 is the end of the annual accounting period. (5 p.)
a. The Prepaid Insurance account shows a debit balance of $2,340, representing the cost of a two-year fire insurance policy that was purchased on October 1 of the current year and has not been adjusted to-date.
b. The Store Supplies account has a debit balance of $400; a year-end inventory count reveals $80 of supplies still on hand.
c. On November 1 of the current year, Unearned Rent was credited for $1,500 for a three-month rent period beginning Nov. 1.
d. Estimated depreciation on store equipment is $600.
e. Accrued salaries amount to $1,400.

Sagot :

Shahzaibfaraz

Answer:

a.

Insurance expense                   $292.5 Dr

     Prepaid Insurance                   $292.5 Cr

b.

Supplied expense                 $320 Dr

    Supplies                                    $320 Cr

c.

Unearned rent                    $1000 Dr

      Rent Revenue                     $1000 Cr

d.

Depreciation expense                                       $600 Dr

    Accumulated depreciation - Equipment            $600 Cr

e.

Salaries expense                            $1400 Dr

     Salaries Payable                              $1400 Cr

Explanation:

a.

Insurance expense has been debited for three month period of current year from October to December. The insurance expense for 3 month period was

Insurance expense = 2340 * 3/24 = $292.5

b.

The supplies worth 400 - 80 = 320 have been used and should be recorded as a debit to supplies expense and a credit to supplies

c.

Rent for two months period worth 1500 * 2/3 = $1000 has been earned by the end of December and should be recorded as rent revenue and debit to unearned rent.

d.

The depreciation expense should be recorded.

e.

The salaries are payable and recorded as an expense and a liability to show that they are still payable

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