Question

Golden Eagle Company prepares monthly financial statements for its bank. The November 30 and December 31 adjusted trial balances include the following account information:30-Nov 31-Decdebit credit debit creditsupplies $ 2,000 $ 3,500 prepaid Insurance $ 8,000 $ 6,000 salaries payable $ 11,000 $ 16,000unearned revenue $ 3,000 $ 1,500The following information also is known:1. Purchases of supplies in December total $4,500.2. No insurance payments are made in December.3. $11,000 is paid to employees during December for November salaries.4. On November 1, a tenant pays Golden Eagle $4,500 in advance rent for the period November through January. Unearned Revenue is credited.Required:Show the adjusting entries that were made for supplies, prepaid insurance, salaries payable, and unearned revenue on December 31.

Answer 1

The adjusting entries for Golden Eagle Company include recording the usage of supplies, the expense of prepaid insurance, the accruement of salaries, and recognition of rental income that has been earned.

Step-by-step explanation:

The student question pertains to the adjusting entries required for the December 31 financial statement preparation for Golden Eagle Company. The following are the adjusting entries based on the information given:

• Supplies: Supplies started at $2,000 and increased to $3,500 with a purchase of $4,500. The adjusting entry would increase the Supplies Expense account and decrease the Supplies account.
  Journal Entry: Supplies Expense $4,500 / Supplies $4,500.
• Prepaid Insurance: The Prepaid Insurance decreased from $8,000 to $6,000 without any new insurance payments made in December, implying $2,000 worth of insurance has been used.
  Journal Entry: Insurance Expense $2,000 / Prepaid Insurance $2,000.
• Salaries Payable: An additional $5,000 is added to Salaries Payable (from $11,000 to $16,000), and $11,000 is paid for November salaries.
  Journal Entry: Salaries Expense $5,000 / Salaries Payable $5,000.
• Unearned Revenue: The company earned one-third of the advance payment of $4,500 for rent by the end of December; two months of rent are earned leaving one month unearned, decreasing Unearned Revenue from $3,000 to $1,500.
  Journal Entry: Unearned Revenue $1,500 / Rental Income $1,500.

These adjusting entries ensure that the financial statements reflect the revenues earned and the expenses incurred during the period.

Answer 2

Step-by-step explanation:

The adjusting entries are shown below:

1. Supplies Expense A/c Dr $3,000 ($2,000 + $4,500 - $3,500)

To Supplies A/c $3,000

(Being supplies purchased)

2. Insurance Expense A/c Dr $2,000

To Prepaid Insurance A/c $2,000

(Being prepaid insurance adjusted)

3. Salary expense A/c Dr $16,000

To salary payable A/c $16,000

(Being salary adjusted)

4. Unearned revenue A/c Dr $1,500

To Service revenue A/c $1,500

(Being unearned revenue adjusted)