Question

The following transactions occurred during December 31, 2021, for the Falwell Company.

1. A three-year fire insurance policy was purchased on July 1, 2021, for $12,000. The company debited insurance expense for the entire amount.
2. Depreciation on equipment totaled $15,000 for the year.
3. Employee salaries of $18,000 for the month of December will be paid in early January 2022.
4. On November 1, 2021, the company borrowed $200,000 from a bank. The note requires principal and interest at 12% to be paid on April 30, 2022.
5. On December 1, 2021, the company received $3,000 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December, January, and February was credited to deferred rent revenue.
6. On December 1, 2021, the company received $3,000 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December, January, and February was credited to rent revenue rather than deferred rent revenue for $3,000 on December 1, 2021.

Prepare the necessary adjusting entries for each of the above situations. 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.)

*I was able to figure out 1-3, but I am struggling with 4-6.*

Answer 1

Adjusting entry

Date	account and explanation	debit	credit
Dec 31	Prepaid insurance (12000*30/36)	10000
	Insurance expense		10000
Dec 31	Depreciation expense	15000
	Accumulated depreciation-Equipment		15000
Dec 31	Salaries expense	18000
	Salaries payable		18000
Dec 31	Interest expense (200000*12%*2/12)	4000
	Interest payable		4000
Dec 31	Deferred rent revenue (3000/3)	1000
	Rent revenue		1000
Dec 31	Rent revenue	2000
	Deferred rent revenue		2000