Question

A+T Williamson Company is making adjusting entries for the year ended December 31 of the current year. In developing information for the adjusting entries, the accountant learned the following:

1. A two-year insurance premium of $5,280 was paid on October 1 of the current year for coverage beginning on that date. The bookkeeper debited the full amount to Prepaid Insurance on October 1.
2. At December 31 of the current year, the following data relating to Shipping Supplies were obtained from the records and supporting documents.

Shipping supplies on hand, January 1 of the current year	$	19,500
Purchases of shipping supplies during the current year		64,000
Shipping supplies on hand, counted on December 31 of the current year		18,500

Answer 1

Transaction	General journal	Debit	Credit
1	Insurance expense (Note 1)	660
	Prepaid insurance		660
	(To record Insurance Expense)
2	Shipping supplies expense (Note 2)	65,000
	Shipping supplies		65,000
	(To record Shipping Expense)
Note 1
Insurance Expense	5,280
Number of Months for which Insurance is paid	24
Insurance Expense per month	220
Insurance Expense from Oct to Dec ( 3 months)	660
Note 2
Shipping supplies on hand as on January 1	19,500
Purchases Made during the year	64,000
Shipping supplies on hand as on December 31	-18,500
Shipping Supplies Expense	65,000