Question

On December 31, 2019, the Notes Payable account at Northwood Manufacturing Company had a balance of $16,000. This balance represented a three-month, 7.5 percent note issued on November 1.

On January 2, 2019, Hitech Computer Consultants purchased flash drives, paper, and other supplies for $5,230 in cash. On December 31, 2019, an inventory of supplies showed that items costing $1,590 were on hand. The Supplies account has a balance of $5,230.

On September 1, 2019, North Dakota Manufacturing paid a premium of $14,640 in cash for a one-year insurance policy. On December 31, 2019, an examination of the insurance records showed that coverage for a period of four months had expired.

On May 1, 2019, Headcase Beauty Salon signed a one-year advertising contract with a local radio station and issued a check for $10,800 to pay the total amount owed. On December 31, 2019, the Prepaid Advertising account has a balance of $10,800.

For each of the above independent situations, prepare the adjusting entries that must be made on the December 31, 2019, worksheet assuming no previous adjusting entries have been made during the year.

Required :

#Record the adjustment for interest.

#Record the adjustment for supplies used.

#Record the adjustment for insurance expired.

#Record the adjustment for advertising expired.

Answer 1

Date	Accounts Title & Explanation	Debit	Credit
2019
Dec. 31	Interest Expense ($16000 * .075 * 2 / 12)	$200
	Interest Payable		$200
	(For recording interest expenses on note payable)
Dec. 31	Supplies Expense ($5230 – $1590)	$3640
	Supplies		$3640
	(Adjusting entry for recording consumed supplies)
Dec. 31	Insurance Expense ($14640 * 4 / 12)	$4880
	Prepaid Insurance Expense		$4880
	(Adjusting entry for recording expired prepaid insurance expenses)
Dec. 31	Advertising Expense ($10800 * 8 / 12)	$7200
	Prepaid Advertising Expense		$7200
	(Adjusting entry for expired prepaid advertising expense)