Question

a.-b. Merchandise Inventory, before adjustment, has a balance of $7,900. The newly counted inventory balance is $8,400. Unearned Seminar Fees has a balance of $6,400, representing prepayment by customers for five seminars to be conducted in June, July, and August 2019. Two seminars had been conducted by June 30, 2019. Prepaid Insurance has a balance of $14,400 for six months’ insurance paid in advance on May 1, 2019. Store equipment costing $5,820 was purchased on March 31, 2019. It has a salvage value of $540 and a useful life of four years. Employees have earned $290 that has not been paid at June 30, 2019. The employer owes the following taxes on wages not paid at June 30, 2019: SUTA, $8.70; FUTA, $1.74; Medicare, $4.21; and social security, $17.98. Management estimates uncollectible accounts expense at 1 percent of sales. This year’s sales were $2,400,000. Prepaid Rent has a balance of $7,200 for six months’ rent paid in advance on March 1, 2019. The Supplies account in the general ledger has a balance of $440. A count of supplies on hand at June 30, 2019, indicated $170 of supplies remain. The company borrowed $7,700 from First Bank on June 1, 2019, and issued a four-month note. The note bears interest at 12 percent. Required: Based on the information above, record the adjusting journal entries that must be made for Sufen Consulting on June 30, 2019. The company has a June 30 fiscal year-end. Analyze: After all adjusting entries have been journalized and posted, what is the balance of the Prepaid Rent account?

Answer 1

Trans	Accounts Title	Dr	Cr
a	Inventory	$500
	Cost of Good sold		$500
b	Unearned Seminar fees	2560
	Fees Earned (6400/5*2)		2560
c	Insurance expenses	$4,800
	Prepaid Insurance (14400/6*2)		$4,800
d	Depreciation expenses	330
	Accumulated Depreciation-Store equipment		$330
	(5820-540)/4*3/12
e	Payroll Tax expenses	$32.63
	Social security taxes payable		$17.98
	Medicare taxes payable		4.21
	Federal Unemployment Taxes payable		1.74
	State Unemployment Taxes payable		$8.7
f	Bad Debt expenses	2400
	Allowance for Uncollectible Accounts		2400
g	Rent expenses	4800
	Prepaid Rent (7200/6*4)		4800
h	Supplies expenses	270
	Supplies (440-170)		270
i	Interest expenses	77
	Interest Payable (7700*12%1/12)		77
	Balance of prepaid rent
	7200-4800	2400
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