Question

The following transactions occurred during December 31, 2018, for the Microchip Company.

1. On October 1, 2018, Microchip lent $85,000 to another company. A note was signed with principal and 6% interest to be paid on September 30, 2019.
2. On November 1, 2018, the company paid its landlord $7,800 representing rent for the months of November through January. Prepaid rent was debited.
3. On August 1, 2018, collected $13,800 in advance rent from another company that is renting a portion of Microchip’s factory. The $13,800 represents one year’s rent and the entire amount was credited to rent revenue.
4. Depreciation on office equipment is $5,100 for the year.
5. Vacation pay for the year that had been earned by employees but not paid to them or recorded is $8,600. The company records vacation pay as salaries expense.
6. Microchip began the year with $2,600 in its asset account, supplies. During the year, $7,100 in supplies were purchased and debited to supplies. At year-end, supplies costing $3,550 remain on hand.

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.)

Answer 1

Adjusting entries

Date	Account and explanation	debit	credit
Dec 31	Interest receivable (85000*6%*3/12)	1275
	Interest revenue		1275
	(To record accrued interest)
Dec 31	Rent expense (7800*2/3)	5200
	Prepaid rent		5200
	(To record rent expenses)
Dec 31	Rent revenue (13800*7/12)	8050
	Unearned rent revenue		8050
	(To record unearned revenue)
Dec 31	Depreciation expense	5100
	Accumulated depreciation-Office equipment		5100
	(To record dep)
Dec 31	Salaries expenses	8600
	Salaries payable		8600
	(To record salaries expenses)
Dec 31	Supplies expense (2600+7100-3550)	6150
	Supplies		6150
	(To record supplies expenses)