Question

Golden Eagle Company prepares monthly financial statements for its bank. The November 30 adjusted trial balance includes the following account information:

November 30
Debit Credit
Supplies $1,650
Prepaid Insurance 6,600
Salaries Payable $10,300
Deferred Revenue 2,300

The following information is known for the month of December: Purchases of supplies during December total $3,800. Supplies on hand at the end of December equal $3,150. No insurance payments are made in December. Insurance cost is $1,650 per month. November salaries payable of $10,300 were paid to employees in December. Additional salaries for December owed at the end of the year are $15,300. On November 1, a tenant paid Golden Eagle $3,450 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 deferred revenue on December 31.

Answer 1

Answer:

Date       General Journal                                Debit       Credit

Dec 31    Supplies expenses                           $2,300

               (1,650+3,800-3150)

                      Supplies                                                       $2,300

               (To record the supplies used during the period)

Dec 31     Insurance expenses                         $1,650

                      Prepaid expenses                                        $1,650

                (To record the insurance expired for December)

Dec 31      Salaries expenses                            $15,300

                       Salaries payable                                          $15,300

                (To record the unpaid salaries)

Dec 31        Deferred revenue                            $1,150

                   (3450/3 months)

                          Rent revenue                                             $1,150

                   (To record the revenue earned during the period)

Answer 2

Journal entries are used in accounts for the purpose of recording financial transactions either economic or non-economic for the business.

Adjustment entries are used for making final income and expenditure recordings at the point of their occurrence.  

The adjustment entry for the given data

Supplies expenses Dr       $2,300

To supplies                         $2,300

The supplies are recorded during 31 December:

$1,650+3,800-3150\\=2300$

Dec 31  Insurance expenses  Dr.       1650

            To  Prepaid expenses           1650

Dec 31    Salaries expenses Dr.         15,300

               To Salaries payable            15,300

Dec 31     Deferred revenue Dr.        1150

                 To Rent revenue                1150

Revenue earned during this period is calculated by:

$\frac{3450}{3} \\=1150$

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