Question

Record the December 31 adjusting entries for the following transactions and events in general journal form. Assume that December 31 is the end of the annual accounting period.

a. The Prepaid Insurance account shows a debit balance of $2,340, representing the cost of a two-year fire insurance policy that was purchased on October 1 of the current year and has not been adjusted to-date.

b. The Store Supplies account has a debit balance of $400; a year-end inventory count reveals $80 of supplies still on hand.

c. On November 1 of the current year, Rent Earned was credited for $1,500. This amount represented the rent earned for a three-month period beginning November 1.

d. Estimated depreciation on store equipment is $600.

e. Accrued salaries amount to $1,400.

Show any work that needs to be done and explain.

Answer 1

a) since the insurance expired for 3 months the amount
=(3/24)*2340=292.50
insurance expense(db)292.50
prepaid insurance(cr) 292.50

b)supplies expense(db) 400-80=320
supplies(cr)320

c)rent earned(db)1500/3=500
Rent receivable(cr)500

d)depreciation expense(db)600
accumulated depreciation(cr)600

e) Salaries expense(db)1400
salaries payable(cr)1400