Question

The following information is known for the month of December: Purchases of supplies during December total $4,500. Supplies on hand at the end of December equal $3,500. No insurance payments are made in December. Insurance cost is $2,000 per month. November salaries payable of $11,000 were paid to employees in December. Additional salaries for December owed at the end of the year are $16,000. On November 1, a tenant paid Golden Eagle $4,500 in advance rent for the period November through January, and Deferred Revenue was credited for the entire amount.

Required:

Show the adjusting entries that were made for supplies, prepaid insurance, salaries payable, and unearned revenue on December 31.

Answer 1

1. a.) Dr Supplies 4500

Cr Cash 4500

b.) Dr Supplies expense 1000

Supplies 1000

2.a.) Dr Prepaid insurance 24000

Cr Cash 24000

b.) Dr Insurance expense 2000

Cr Prepaid insurance 2000

3. Dr Salaries expense 16000

Cr Salaries payable 16000

4.a.)Dr Cash 4500

Advance rent 4500

b.)Dr Rent expense 1500

Cr Advance rent 1500

Step-by-step explanation:

1.Supplies were purchased on cash and at the end of period supplies were on hand was 3500 so 1000 was of supplies were used.

2. Annually insurance prepaid was 24000=2000 * 12.so

For the month of Dec was 2000 expense.

3.Salaries for the month of Dec was payable of Rs.16000.

4.As cash was received against rent which was unearned.the rent expense for the month of Dec was = 4500/3=1500.