Question

The following information is known for the month of December: Purchases of supplies during December total $4,500. Supplies on hand at the end of December equal $3,500. No insurance payments are made in December. Insurance cost is $2,000 per month. November salaries payable of $11,000 were paid to employees in December. Additional salaries for December owed at the end of the year are $16,000. On November 1, a tenant paid Golden Eagle $4,500 in advance rent for the period November through January, and Deferred Revenue was credited for the entire amount.

Required:

Show the adjusting entries that were made for supplies, prepaid insurance, salaries payable, and unearned revenue on December 31.

Answer 1

Answer:

1. a.) Dr Supplies 4500

               Cr Cash          4500

  b.)  Dr Supplies expense  1000

                            Supplies            1000

2.a.) Dr Prepaid insurance 24000

                   Cr  Cash                 24000

  b.) Dr  Insurance expense   2000

                           Cr Prepaid insurance    2000

3. Dr Salaries expense  16000

                       Cr Salaries payable 16000

4.a.)Dr  Cash          4500

                 Advance rent     4500

  b.)Dr Rent expense   1500

                     Cr     Advance rent    1500

Explanation:

1.Supplies were purchased on cash and at the end of period supplies were on hand was 3500 so 1000 was of supplies were used.

2. Annually  insurance prepaid was 24000=2000 * 12.so

For the month of Dec was 2000 expense.

3.Salaries for the month of Dec was payable of Rs.16000.

4.As cash was received against rent which was unearned.the rent expense for the month of Dec was = 4500/3=1500.