Question

A company has a fiscal year-end of December 31: (1) on October 1, $15,000 was paid for a one-year fire insurance policy: (2) on June 30 the company advanced its chief financial officer $13,000; principal and interest at 7% on the note are due in one year; and (3) equipment costing $63,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $12,600 per year. Prepare the necessary adjusting entries at December 31 for each of the above items. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet es On October 1, $15,000 was paid for a one-year fire insurance policy. Note: Enter debits before credits. Transaction General Journal Debit Credit

Answer 1

Solution:

Journal Entries
Event	Particulars	Debit	Credit
1	Insurance expense Dr	$3,750.00
	To Prepaid insurance		$3,750.00
	(To record insurance expense)
2	Interest receivables Dr	$455.00
	To Interest revenue		$455.00
	(To record interest revenue)
3	Depreciation expense Dr	$12,600.00
	To Accumulated depreciation - Equipment		$12,600.00
	(To record depreciation expense)