Question

At the end of 2020, Vaughn Manufacturing made four adjusting entries for the following items:

1. Depreciation expense, $25500.
2. Expired insurance, $2140 (originally recorded as prepaid insurance.)
3. Interest payable, $6500.
4. Rent receivable, $11000.

In the normal situation, to facilitate subsequent entries, the adjusting entry or entries that may be reversed is (are) :__________

a. Entry No. 3 only.
b. Entry No. 3 and No.
c. Entry No. 2, No. 3 and No. 4.
d. Entry No. 4 only.

Answer 1

b. Entry No. 3 and No. 4

Step-by-step explanation:

Based on the information given in order to facilitate the subsequent journal entries, the appropriate adjusting entry or entries that may be reversed is (are) 3. Interest payable of the amount of $6500 and 4. Rent receivable of the amount of $11000 which represent:

Entry No. 3 and No. 4

3. Interest payable, $6500

4. Rent receivable, $11000.

INTEREST PAYABLE can be seen or defined as the interest amount a company or an organization owed their lender or borrower which they are yet to pay the lender or borrower.

RENT RECEIVABLE can be seen or defined as the amount owed by a tenant which a landlord is supposed to received but has not yet been paid by the tenant.

Therefore In the normal situation, to facilitate subsequent entries, the adjusting entry or entries that may be reversed is (are) :Entry No. 3 and No. 4