Question

1. Prepare the Adjusting Journal Entries (AJEs) that should be made on December 31, 2018, the end of the accounting year, for each of the following independent situations. If no AJE is required, indicate “none.” Assume the firm only makes AJEs at the end of the accounting year.

1. On March 31, 2018, the firm collected $12,000 of rent for 12 months in advance. The journal entry to record the receipt included a credit to a temporary account.

Revenue (3*1,000)                   3,000

Unearned                                             3,000

2. On May 1, 2018, the firm collected $6,000 of rent for 12 months in advance. The journal entry to record the receipt included a credit to a balance sheet account.

Unearned (8*500)                    4,000

Revenue                                              4,000

3. On September 30, 2018, the firm collected $7,500 of rent for 3 months in advance. The journal entry to record the receipt included a credit to an income statement account.

None

4. On June 1, 2018, the firm collected $3,000 of rent for 3 months in advance. The journal entry to record the receipt included a credit to a permanent account.

none

5. On August 1, 2018, the firm paid $60,000 for a 6-month insurance policy. The journal entry to record the payment included a debit to a balance sheet account.

Expense (5*10,000)                 50,000

Prepaid                                                50,000

6. On September 1, 2018, the firm paid $15,000 for a 3-month rental of a machine. The journal entry to record the payment included a debit to a balance sheet account.

None

7. On February 1, 2018, the firm paid $6,000 for a 6-month rental of a machine. The journal entry to record the payment included a debit to an income statement account.

None

8. On October 1, 2018, the firm paid $80,000 for an 8-month rental of a machine. The journal entry to record the payment included a debit to a temporary account.

1. On May 1, 2018, the company borrowed $1,200,000 at 4%. The principle is due on May 1, 2019. The interest is due every six months and the company made the first interest payment on November 1, 2018.

Expense (1,200,000*4%*2/12)               8,000

Payable                                                                 8,000

10. On August 31, 2015, the company borrowed $6,000,000 for six years at 6%. The interest is due and payable every year on August 31. The principle is due and payable in three equal installments on August 31, 2017, August 31, 2019, and August 31, 2021. The company made its interest and principle payments as required.

Expense (2,000,000*6%*4/12)               40,000

Payable                                                                 40,000

11. On September 1, 2018, the firm bought $100,000 of 3%, three-year bonds. The firm paid $100,000 for this investment. The company will collect $1,500 of interest on the bonds every six months starting on March 1, 2019.

Receivable (100,000*3%*4/12)              1,000

Revenue                                                       1,000

kindly verify my answers and correct if wrong

Answer 1