Question

a. On September ?1, when we collected ?$66 comma 000 rent in? advance, we debited Cash and credited Unearned Rent Revenue. The tenant was paying one? year's rent in advance. At December? 31, we must account for the amount of rent we have earned. b. Interest revenue of ?$3 comma 400 has been earned but not yet received on a ?$50 comma 000 note receivable held by the business. c. Salary expense is ?$9 comma 300 per daylong dashMonday through Fridaylong dashand the business pays employees each Friday. This year December 31 falls on a Wednesday. d. Equipment was purchased last year at a cost of ?$325 comma 000. The? equipment's useful life is five years. It will have no value after five years. Record the? year's amortization. e. On March ?1, when we paid ?$7 comma 800 for a? one-year insurance? policy, we debited Prepaid Insurance and credited Cash. f. The business owes interest expense of ?$9 comma 000 that it will pay early in the next period. g. The unadjusted balance of the Supplies account is ?$13 comma 500. The total cost of supplies remaining on hand on December 31 is ?$6 comma 000.

Answer 1

Journal Entries

	Particulars	Amount ($)	Amount ($)	Description
a.	Unearned Rent a/c Dr	22,000		Advance for 4 months from Sep to Dec 66000*4/12=22000
	To Rent a/c		22,000
	[Being Rent earned in advance for the month from Sep to Dec recorded]
b.	Interest receivable a/c Dr	3,400
	To Interest Income a/c		3,400
	[Being interest income earned but not received recorded at the year end]
c.	Salary expense a/c Dr	37,200		Salary for Monday to Thursday ie 4 days is 9,300*4=37,200
	To Salary payable a/c		37,200
	[Being Salary payable for the last week of december recorded]
d.	Depreciation a/c Dr	65,000		Depreciation= (Cost-Salvage)/Life ie 325,000/5=65,000
	To Equipment a/c		65,000
	[Being depreciation of equipment for the year recorded]
e.	Insurance Expense a/c Dr	1,300		Insurance cost for 2 months is 7800*2/12=1300
	To Pre paid insurance		1,300
	[Being insurance cost for two months amortised]
f.	Interest expense a/c Dr	9,000
	To Interest payable a/c		9,000
	[Being interest payable but not paid recorded]
g.	Consumed supplied a/c Dr	7,500		The difference of 13500 and 6000 is consumed
	To Supplies a/c		7,500
	[Being consumed supplies recorded]