Question

A partial adjusted trial balance of Rooney Sports at January 31, 2020, shows the following. 

ROONEY Sports Adjusted Trial Balance January 31, 2020
	Debit	Credit
Supplies	£800
Prepaid Insurance	1,800
Salaries and Wages Payable		£900
Unearned Service Revenue		850
Supplies Expense	800
Insurance Expense	300
Salaries and Wages Expense	3,200
Service Revenue		3,400

Answer the following questions, assuming the year begins January 1. 

(a) If the amount in Supplies Expense is the January 31 adjusting entry and £1,200 of supplies was purchased in January, what was the balance in Supplies on January 1? 

The balance in Supplies on January 1 £ _______ 

(b) If the amount in Insurance Expense is the January 31 adjusting entry and the original insurance premium was for one year, what was the total premium and when was the policy purchased? 

The total premium £_______  

The policy purchased _______ 

(c) If £3,700 of salaries was paid in January, what was the balance in Salaries and Wages Payable at December 31, 2019? 

The balance in Salaries and Wages Payable at December 31, 2019 £_______ 

Answer 1

a)

Supplies beginning =

Supplies ending = 800

Supplies expense = 800

Supplies purchased = 1,200

Supplies expense = Supplies beginning + Supplies purchased - Supplies ending

800 = Supplies beginning + 1,200 - 800

Supplies beginning = 400

b)

Insurance expense for 1 month = 300

Annual insurance premium = Insurance expense for 1 month x 12

= 300 x 12

= 3,600

Policy must have been purchased on January 1

c)

Salaries paid in January = 3,700

Salaries and wages expense for January = 3,200

Salaries payable at the end of January = 900

Salaries and wages payable on December 31, 2018 = Salaries paid in January - Salaries and wages expense for January + Salaries payable at the end of January

= 3,700 - 3,200 + 900

= 1,400

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