Question

For each of the following, journalize the necessary adjusting entry:

(a)	A business pays weekly salaries of $22,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the fiscal period, assuming that the fiscal period ends (1) on Tuesday, (2) on Wednesday.
(b)	The balance in the prepaid insurance account before adjustment at the end of the year is $18,000. Journalize the adjusting entry required under each of the following alternatives: (1) the amount of insurance expired during the year is $5,300, (2) the amount of unexpired insurance applicable to a future period is $2,700.
(c)	On July 1 of the current year, a business pays $54,000 to the city for license taxes for the coming fiscal year. The same business is also required to pay an annual property tax at the end of the year. The estimated amount of the current year's property tax allocated to July is $4,800. (1) Journalize the two adjusting entries required to bring the accounts affected by the taxes up to date as of July 31. (2) What is the amount of tax expense for July?
(d)	The estimated depreciation on equipment for the year is $32,000.

Answer 1

Date	General Journal	Debit	Credit
a	On Tuesday
	Salary Expense	8800
	Salaries Payable		8800
	22000*2/5
	On Wednesday
	Salary Expense	13200
	Salaries Payable		13200
	(22000-8800)
b	Insurance Expense	5300
	Prepaid Insurance		5300
	Insurance Expense	15300
	Prepaid Insurance		15300
	(18000-2700)
c	License Tax Expense	4500
	Prepaid Taxes		4500
	54000*1/12
	Property Tax Expense	4800
	Property Tax Payable		4800
	amount of tax expense for July
	4500+4800
	9300
d	Depreciation Expense	32000
	Accumulated Depreciation		32000