Arnez Company’s annual accounting period ends on December 31, 2019. The following information concerns the adjusting entries to be recorded as of that date.
Policy | Date of Purchase | Months of Coverage | Cost | |
A | April 1, 2017 | 24 | $ | 15,840 |
B | April 1, 2018 | 36 | 14,616 | |
C | August 1, 2019 | 12 | 13,440 | |
The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years.)
Required:
1. Use the information to prepare adjusting
entries as of December 31, 2019.
2. Prepare journal entries to record the first
subsequent cash transaction in 2020 for parts c and
e.
Solution 1:
Arnez Company | ||||
Adjusting Journal Entries - Dec 31 | ||||
S. no. | Date | Accounts and explanation | Debit | Credit |
a. | 31-Dec | Supllies Expense Dr ($2875+$11874-$2530) | $12,219 | |
To Office Supplies | $12,219 | |||
b. | 31-Dec | Insurance Expense Dr | $12,452 | |
To Prepaid Insurance | $12,452 | |||
[A =
$15840/24*3 = $1980 B = $14616/36*12 = $4872 C = $13440/12*5 = $5600 ] |
||||
c. | 31-Dec | Salaries and wages Expense Dr [$1750*2] | $3,500 | |
To Salaries and wages payable | $3,500 | |||
d. | 31-Dec | Depreciation Expense Dr | $14,875 | |
To Accumulated Depreciation- Building | $14,875 | |||
e. | 31-Dec | Rent Receivable Dr | $3,000 | |
To Rent Earned | $3,000 | |||
f. | 31-Dec | Unearned rent Dr ($2718*2) | $5,436 | |
To Rent Earned | $5,436 |
Solution 2:
Journal Entries | ||||
S. no. | Date | Accounts and explanation | Debit | Credit |
c. | 06-Jan | Salaries and wages payable Dr ($1750*2) | $3,500 | |
Salaries and wages expense Dr ($1750*3) | $5,250 | |||
To Office Supplies | $8,750 | |||
(To record payment of accrued and current salaries) | ||||
e. | 15-Jan | Cash Dr | $6,000 | |
To Rent Receivable | $3,000 | |||
To Rent Earned | $3,000 | |||
(To record receipt of 2 months rent) |
Arnez Company’s annual accounting period ends on December 31, 2019. The following information concerns the adjusting...
Arnez Company's annual accounting period ends on December 31, 2019. The following information concerns the adjusting entries to be recorded as of that date. a. The Office Supplies account started the year with a $4.475 balance. During 2019, the company purchased supplies for $18,482, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2019, totaled $3,938. b. An analysis of the company's insurance policies provided the following facts. Policy Months of Coverage Date...
Arnez Company’s annual accounting period ends on December 31, 2019. The following information concerns the adjusting entries to be recorded as of that date. A) The Office Supplies account started the year with a $4,225 balance. During 2019, the company purchased supplies for $17,449, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2019, totaled $3,718. B) An analysis of the company's insurance policies provided the following facts. Policy Date of Purchase Months...
Arnez Company’s annual accounting period ends on December 31, 2019. The following information concerns the adjusting entries to be recorded as of that date. The Office Supplies account started the year with a $3,075 balance. During 2019, the company purchased supplies for $12,700, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2019, totaled $2,706. An analysis of the company's insurance policies provided the following facts. Policy Date of Purchase Months of Coverage...
Arnez Company's annual accounting period ends on December 31, 2019. The following information concerns the adjusting entries to be recorded as of that date. a. The Office Supplies account started the year with a $3.950 balance. During 2019, the company purchased supplies for $16,314, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2019, totaled $3,476. b. An analysis of the company's insurance policies provided the following facts. Policy Months of Coverage Date...
Arnez Company’s annual accounting period ends on December 31, 2019. The following information concerns the adjusting entries to be recorded as of that date. The Office Supplies account started the year with a $3,550 balance. During 2019, the company purchased supplies for $14,662, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2019, totaled $3,124. An analysis of the company's insurance policies provided the following facts. Policy Date of Purchase Months of Coverage...
Arnez Company's annual accounting period ends on December 31, 2019. The following information concerns the adjusting entries to be recorded as of that date. a. The Office Supplies account started the year with a $3,200 balance. During 2019, the company purchased supplies for $13,216, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2019, totaled $2,816. b. An analysis of the company's insurance policies provided the following facts. Policy A Months of Coverage...
Arnez Company's annual accounting period ends on December 31, 2019. The following information concerns the adjusting entries to be recorded as of that date. a. The Office Supplies account started the year with a $4,475 balance. During 2019, the company purchased supplies for $18,482, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2019, totaled $3,938. b. An analysis of the company's insurance policies provided the following Policy Months of Coverage Date of...
Arnez Company's annual accounting period ends on December 31, 2019. The following information concerns the adjusting entries to be recorded as of that date. a. The Office Supplies account started the year with a $4,500 balance. During 2019, the company purchased supplies for $18,585, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2019, totaled $3,960. b. An analysis of the company's insurance policies provided the following facts. Policy A B Date of...
Arnez Company’s annual accounting period ends on December 31, 2018. The following information concerns the adjusting entries to be recorded as of that date. The Office Supplies account started the year with a $3,625 balance. During 2018, the company purchased supplies for $14,971, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2018, totaled $3,190. An analysis of the company's insurance policies provided the following facts. Policy Date of Purchase Months of Coverage...
Arnez Company's annual accounting period ends on December 31, 2019. The following information concerns the adjusting entries to be recorded as of that date. a. The Office Supplies account started the year with a $3,850 balance. During 2019, the company purchased supplies for $15,901, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2019, totaled $3,388 b. An analysis of the company's insurance policies provided the following facts. Policy Months of Coverage Date...