A partial adjusted trial balance of Cullumber Company at January 31, 2021, shows the following.

Exercise 130

A partial adjusted trial balance of Cullumber Company at January 31, 2021, shows the following.

CULLUMBER COMPANY Adjusted Trial Balance January 31, 2021
	Debit	Credit
Supplies	$3,700
Prepaid Insurance	8,700
Salaries and Wages Payable		$2,600
Unearned Revenue		2,600
Supplies Expense	4,700
Insurance Expense	1,450
Salaries and Wages Expense	7,700
Service Revenue		8,400

Answer the following questions, assuming the year begins January 1.

1. If the amount in Supplies Expense is the January 31 adjusting entry, and $3,400 of supplies was purchasedin January, what was the balance in Supplies on January 1?

2. If the amount in Insurance Expense is the January 31 adjusting entry, and the original insurance premium was for one year, what was the total premium and when was the policy purchased? The policy was purchased on?

3. If $10,000 of salarieswas paid in January, what was the balance in Salaries and Wages Payable at December 31, 2020?

4. If $6,300was received in January for services performed in January, what was the balance in Unearned Revenue at December 31, 2020?

Solutions

Expert Solution

1. Supplies expense = Supplies on January 1 + Purchase of supplies - Supplies on January 31

4,700 = Supplies on January 1 + 3,400-3,700

Supplies on January 1 = $5,000

2. Insurance expense for 1 month = $1,450

Hence, annual insurance premium= 1,450 x 12

= $17,400

The premium was = $17,400

Policy was purchased on August 1, 2020

3. Salaries and wages payable on December 31, 2020 = Salaries paid in January + Salaries payable on January 31, 2021 - Salary expense of January 2021

= 10,000+2,600-7,700

= $4,900

4. Unearned revenue on December 31, 2020 = Service revenue received on January + Unearned revenue on January 31, 2021 - service revenue of January 2021

= 6,300+2,600-8,400

= $500

ekkarill92 answered 1 year ago

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