Question

On June 1, 2019, Cain Company, a new firm, paid $8,400 rent in advance for a seven-month period. The $8,400 was debited to the Prepaid Rent account.On June 1, 2019, the firm bought supplies for $10,250. The $10,250 was debited to the Supplies account. An inventory of supplies at the end of June showed that items costing $5,960 were on hand.On June 1, 2019, the firm bought equipment costing $72,900. The equipment has an expected useful life of 9 years and no salvage value. The firm will use the straight-line method of depreciation.

Answer 1

The Journal entries are as follows:

(i) On June 30, 2019

Rent expense(8,400 ÷ 7) A/c Dr. $1,200

To prepaid Expense $1,200

(To record the rent expense)

(ii) On June 30, 2019

Supplies expense A/c [$10,250 - $5,960] Dr. $4,290

To supplies $4,290

(To record the supplies expense)

(iii) On June 30, 2019

Depreciation Expense A/c [(72,900 ÷ 9) ÷ 12] Dr. $675

To Accumulated depreciation-Equipment $675

(To record the depreciation expense)