Question

Read the description of following adjustments that are required at the end of the accounting period for AAA Appliance Repair Services. Record the necessary journal entries required at the end of January. Prepaid rent for the year on January 1, 2019. Rent expired during the month of January 2019, $2,000. Purchased supplies for $7,600 on January 1, 2019. Inventory of supplies was $1,600 on January 31, 2019. Depreciation is computed using the straight-line method. Equipment purchased on January 1, 2019, for $15,000 has an estimated useful life of 5 years with no salvage value. Signed a 3-month contract for $600 of prepaid advertising on January 1, 2019.

Answer 1

AAA Appliance Repair Services

January Ending Adjusting Entries:

1. Debit Rent Expense $2,000

Credit Prepaid Rent $2,000

To record the rent expense for the month of January 2019.

2. Debit Supplies Expense $6,000

Credit Supplies $6,000

To record the supplies expense for the month of January 2019.

3. Debit Depreciation Expense $250

Credit Accumulated Depreciation $250

To record the depreciation expense for the month of January 2019.

4. Debit Advertising Expense $200

Credit Prepaid Advertising $200

To record the advertising expense for the month of January 2019.

Step-by-step explanation:

a) Data and Transaction Analysis:

1. Rent Expense $2,000 Prepaid Rent $2,000

2. Supplies Expense $6,000 Supplies $6,000 ($7,600 - $1,600)

3. Depreciation Expense $250 Accumulated Depreciation $250 ($15,000/5 * 1/12)

4. Advertising Expense $200 Prepaid Advertising $200 ($600/3)