Question

For each of the following, journalize the necessary adjusting entry:
(a) A business pays weekly salaries of $22,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the fiscal period, assuming that the fiscal period ends (1) on Tuesday, (2) on Wednesday.
(b) The balance in the prepaid insurance account before adjustment at the end of the year is $18,000. Journalize the adjusting entry required under each of the following alternatives:(1) the amount of insurance expired during the year is $5, 300, (2) the amount of unexpired insurance applicable to a future period is $2, 700.
(c) On July 1 of the current year, a business pays $54,000 to the city for license taxes for the coming fiscal year. The same business is also required to pay an annual property tax at the end of the year. The estimated amount of the current year's property tax allocable to July is $4, 800. (1) Journalize the two adjusting entries required to bring the accounts affected by the taxes up to date as of July 31. (2) What is the amount of tax expense for July?
(d) The estimated depreciation on equipment for the year is $32,000.

Answer 1

Answer: Please see explanation column for answer

Explanation:

1.Journal to record  the necessary adjusting entry at the end of the fiscal period on Tuesday,

Account                                                Debit             Credit

Salaries expense                                $8,800

Salaries payable                                                       $8,800

Calculation for for a five-day week ending tuesday

22,000 x 2/5 = $8,800

2.Journal to record  the necessary adjusting entry at the end of the fiscal period on wednesday

Account                                                Debit             Credit

Salaries expense                                $13,200

Salaries payable                                                       $13,200

Calculation for for a five-day week ending Wednesday

22,000 x 3/5 = $13,200

b1.Journal to record the amount of insurance expired during the year

Account                                                Debit             Credit

Insurance expense                            $5,300

Prepaid  Insurance                                                       $5,300

b2Journal to record the amount of insurance expired during the year

Account                                                Debit             Credit

Insurance expense                            $15,300

Prepaid Insurance                                                      $15,300

Calculation: Insurance expired = balance - unexpired insurance = 18,000 - 2,700=$15,300

c1)Journal to record the licence taxes expired for the year

Account                                                Debit             Credit

License tax  expense                         $4500  

Prepaid  tax                                                               $4500

Calculations= license tax per year = $54,000/12= $4500

c2)Journal to record the Property  taxes allocable to july  at $4,800

Account                                                Debit             Credit

Property tax  expense                         $4800  

Property tax payable                                                   $4800

d)Journal to record the estimated depreciation on equipment for the year at  $32,000.

Account                                                Debit             Credit

depreciation  expense                         $32,000  

Accumulated depreciation                                           $32,000