Question

Dellroy Rentals Company faced the following situations. Journalize the adjusting entry needed at December 31, 2016, for each situations. Consider each fact seperately.

a. The business has interest expense of $3,200 that it must oay early in January 2017.
b. Interest revenue of $4,100 has been earned but not yet recieved.
c. On Huky 1, 2016, when the business colected $12,000 rent in advance, it debited Cash and credited Unearned Rent Revenue. The tenant was paying gor two years' rent.
d. Salary expense is $6,100 per day--Monday through friday--and the business pays employees each friday. This year, December 31 falls on a Thursday.
e. The adjusted balance of the Supplies account is $3,200. The total cost of supplies on hand is $1,300.
f. Equipment was purcashed on January 1 of this year at a cost of $180,000. The equipment's useful life is five years. There is no residual value. Record depreciation for this year and then determine the equipments book value.

Answer 1

Journal entries are given below

Equipments book value = $144,000

Step-by-step explanation:

We can journalize each situation by debiting the expenses, assets, and by crediting liabilities, capital, and income given in the situation.

A. To record Interest Expense Payable in January

DEBIT CREDIT

Interest Expense $3,200

Interest Payable $3,200

b. To record Interest Revenue Earned but not Received

DEBIT CREDIT

Interest Receivable $4,100

Interest Revenue $4,100

c. To recognize Unearned Rent Revenue for the Period July to December

DEBIT CREDIT

Unearned Rent Revenue $3,000

(12,000*1/2*6/12)

Rent Revenue $3,000

d. To record Salary due for 4 days from Monday to Thursday

DEBIT CREDIT

Salary Expense $24,400

(6,100*4)

Salary Payable $24,400

e. To recognize the Supplies Expense at year end

DEBIT CREDIT

Supplies Expense $1,900

(3,200 - 1,300)

Supplies $1,900

f. To record depreciation for the current year

DEBIT CREDIT

Depreciation Expense $36,000

(180,000/5)

Accumulated Depreciation $36,000

Equipments book value = Cost of Equipment - Depreciation

Equipments book value = 180,000 - 36,000

Equipments book value = $144,000