Question

The Mazzanti Wholesale Food Company's fiscal year-end is June 30. The company issues quarterly financial statements requiring the company to prepare adjusting entries at the end of each quarter. Assume all quarterly adjusting entries were properly recorded. On December 1, 2017, the company paid its annual fire insurance premium of $5,200 for the year beginning December 1 and debited prepaid insurance. On August 31, 2017, the company borrowed $85,000 from a local bank. The note requires principal and interest at 8% to be paid on August 31, 2018. Mazzanti owns a warehouse that it rents to another company. On January 1, 2018, Mazzanti collected $22,400 representing rent for the 2018 calendar year and credited deferred rent revenue. Depreciation on the office building is $16,800 for the fiscal year. Employee salaries and wages for the month of June 2018 of $17,500 will be paid on July 20, 2018 Prepare the necessary year-end adjusting entries at the end of June 30, 2018, for the above situations.

Answer 1

As all quarterly adjustments have been done the adjustments will be only for the final quarter( April - May- June) and calculations will be accordingly.

Sr. No Accounts Dr. Cr.

June 30 Insurance Expense 1300

Prepaid Insurance 1300

$ 52,00 *3/12= $ 1300

June 30 Interest Expense 1700

Interest Payable 1700

Interest = $ 85,000 * 8/100= $ 6800 , For 3 months the interest would be $6800 * 3/12= $ 1700

June 30 Unearned Rent Revenue 5600

Rent Revenue Earned 5600

Rent Revenue for 3 months would be = $ 22,400 *3/12= $ 5600

June 30 Depreciation Expense 4200

Accumulated Depreciation 4200

Depreciation for 3 months = $ 16,800 *3/12= $ 4200

June 30 Salaries Expense 17500

Salaries Payable 17500

Salaries payable for the month of June