Question

On June 1, 2019, Cain Company, a new firm, paid $4,300 rent in advance for a five-month period. The $4,300 was debited to the Prepaid Rent account. On June 1, 2019, the firm bought supplies for $7,250. The $7,250 was debited to the Supplies account. An inventory of supplies at the end of June showed that items costing $2,950 were on hand. On June 1, 2019, the firm bought equipment costing $44,160. The equipment has an expected useful life of 8 years and no salvage value. The firm will use the straight-line method of depreciation. Prepare end-of-June adjusting entries for Cain Company.

Answer 1

S/N Account and Explanation Debit Credit

1. Rent expense $860

($4,300 / 5 month)

Prepaid rent $860

(To record adjusted rent expense)

2. Supplies expense $4,300

($7,250 - $2,950)

Supplies $4300

(To record adjusted supplies)

3. Depreciation expense $460

(($44,160/8)/12)

Accumulated depreciation $460

(To record depreciation)