Question

All of the current year's entries for Zimmerman Company have been made, except the following adjusting entries. The company's annual accounting year ends on December 31. On September 1 of the current year, Zimmerman collected six months' rent of $9,600 on storage space. At that date, Zimmerman debited Cash and credited Unearned Rent Revenue for $9,600. On October 1 of the current year, the company borrowed $18,000 from a local bank and signed a one-year, 12 percent note for that amount. The principal and interest are payable on the maturity date. Depreciation of $3,500 must be recognized on a service truck purchased in July of the current year at a cost of $22,000.

Answer 1

prepaid rent 6,400 debit

rent revenue 6,400 credit

--to record accrued rent revenue--

interest expense 540 debit

interest payable 540 credit

--to record accrued interest on the note--

depreciation expense 3,500 debit

accumulated depreciation-truck 3,500 credit

--to record the depreciation on company's truck--

Step-by-step explanation:

earned rent:

9,600 for six months: 9,600 / 6 = 1,600 dollars per month

months from September 1st to December 31th: 4 months

earned rent revenue: 1,600 x 4 = 6,400 dollars

interest acrued on the note:

principal x rate x time

18,000 x 0.12 x 3/12 = 540

we ddebit the expense and credit the payable

depreciation:

for the amount stated we debit the expense and credit the accumulated depreciation