Question

1. Prepaid Insurance $9,501. The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on April 1, 2014, for $7,308. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2015, for $4,020. This policy has a term of 2 years. 2. Unearned Rent Revenue $441,210. The company began subleasing office space in its new building on November 1. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease. Number of Monthly Term (in months) Date Rent Leases Nov. 1 $5,010 5 $8,990 Dec. 1 3. Notes Payable $126,000. This balance consists of a note for 9 months at an annual interest rate of 10%, dated November 1. 4. Salaries and Wages Payable $0. There are 10 salaried employees. Salaries are paid every Friday for the current week. 6 employees receive a salary of $745 each per week, and 4 employees earn $505 each per week. Assume December 31 is a Tuesday. Employees do not work weekends. All employees worked the last 2 days of December. Prepare the adjusting entries at December 31, 2015. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit Dec. 31 TInsurance Expense 1. 1,827 х Prepaid Insurance 3,837 Dec. 31 2. Unearned Rent Revenue 104,040 Rent Revenue 104,040 3. Dec. 31TInterest Expense 1,890 Interest Payable 1,890 Dec. 31 TSalaries and Wages Expen 4. 4,533 Salaries and Wages Pay 4,533

Answer 1

Credit Debit $4.446 No. Date Accounts Titles and Explanation 1. Dec. 31 Insurance Expense Prepaid Insurance (To recognised insurance expense) $4,446 Workings: Building Policy = $7,308/3 Years = Vehicle Policy = $4,020/2 Years = $2,436 $2.010 $4,446 $86.060 2. Dec. 31 Unearned Rent Revenue Rent Revenue $86,060 Workings: Unearned Rent Revenue: [($5,010 * 2 * 5) + ($8.990 * 1 * 4)] $86.060 3. $2.100 Dec. 31 Interest Expense Interest Payable $2.100 Workings: Interest Expense ($126,000 * 10% * 2/12) $2.100 $2.596 Dec. 31 Salaries and wages Expense Salaries and wages Payable $2.596 Workings: Daily Salary Per Week No. of employees No. of working days (b) 5 5 No. of working Rate days (c=a/b) (d) $149 $101 (a) (e) Total Payable (f=c*d*e) $1,788 $808 $2,596 $745 $505 Total