Question

What would the journal entry be for these adjusting entries?

1. On October 1, the company loaned $3,000 to an officer who will repay the loan in one year at an annual interest rate of 12%.

2. On November 1, the company deposited $10,000 in a savings account that earned 3% interest per year.

3. Paid $1,100 for an 11-month insurance premium on July 1, this year. The entry in July increased the Prepaid insurance account.

4. Purchased equipment for $12,000 cash on January 1, this year; estimated a useful life of five years with a residual value of $2,000.

5. Unearned rent revenue of $900 was for rent for the period December 1, this year, to March 1, next year.

6. On July 1, the company took out a 1 year note for $3,000 at an interest rate of 10%

Answer 1

Date	Title	Debit	Credit
	Interest receivable ($3,000*12%*3/12)	$        90
	Interest revenue		$        90
	(Interest revenue accrued for 3 months)
	Interest receivable ($10,000*3%*2/12)	$        50
	Interest revenue		$        50
	(Interest revenue accrued for 2 months)
	Insurance expense ($1,100/11*6)	$     600
	Prepaid insurance		$     600
	(To record insurance expired)
	Depreciation expense ($12,000-$2,000)/5)	$ 2,000
	Accumulated depreciation		$ 2,000
	(To record depreciation expense)
	Unearned rent revenue ($900/3*1)	$     300
	Rent revenue		$     300
	(To record rent revenue earned)
	Interest expenses ($3,000*10%/12*6)	$     150
	Interest payable		$     150
	(To record interest accrued on note)