Question

Below are transactions for Wolverine Company during 2021.On December 1, 2021, Wolverine receives $2,400 cash from a company that is renting office space from Wolverine. The payment, representing rent for December and January, is credited to Deferred Revenue.Wolverine purchases a one-year property insurance policy on July 1, 2021, for $11,280. The payment is debited to Prepaid Insurance for the entire amount.Employee salaries of $1,400 for the month of December will be paid in early January 2022.On November 1, 2021, the company borrows $7,000 from a bank. The loan requires principal and interest at 12% to be paid on October 30, 2022.Office supplies at the beginning of 2021 total $840. On August 15, Wolverine purchases an additional $1,800 of office supplies, debiting the Supplies account. By the end of the year, $340 of office supplies remains.Required:Record the necessary adjusting entries at December 31, 2021, for Wolverine Company. You do not need to record transactions made during the year. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)

Answer 1

1. Dr Cash 2400

Cr Deferred revenue 2400

(To record advance received for office space,which is not earned yet)

2.a)Dr Prepaid insurance 11280

Cr Cash 11280

( To record purchase of insurance )

b) Dr Insurance expense 5640

Cr prepaid insurance 5640

( To record insurance expired)

3. Dr salary expense 1400

Cr Salary payable 1400

( To record salary expense for the m/o December)

4. Dr Cash 7000

Cr Loan payable 7000

( Acquire loan from bank)

5. a) Dr Interest expense 1680

Cr interest payable 1680

( To record interest expense of 2 months )

6. a)Dr supplies 1800

Cr Cash 1800

(Supplies purchased)

b) Dr Supplies expense 1460

Cr Supplies 1460

(Adjusting entry of supplies used)

Step-by-step explanation:

2. Insurance for the month = 11280/12= 940. For 6 months= 940*6=5640

4. yearly interest rate = 7000 *12% = 840. two month interest = 840 *2= 1680