Question

Problem 3-3B Record adjusting entries (LO3-3) The information necessary for preparing the 2021 year-end adjusting entries for Bearcat Personal Training Academy appears below. Bearcat's fiscal year-end is December 31. 1. Depreciation on the equipment for the year is $5,300. 2. Salaries earned (but not paid) from December 16 through December 31, 2021, are $2,300. 3. On March 1, 2021, Bearcat lends an employee $11,500. The employee signs a note requiring principal and interest at 12% to be paid on February 28, 2022. 4. On April 1.2021, Bearcat pays an insurance company $11,160 for a two-year fire insurance policy. The entire $11,160 is debited to Prepaid Insurance at the time of the purchase. 5. Bearcat uses $850 of supplies in 2021 6. A customer pays Bearcat $2,190 on October 31, 2021. for three months of personal training to begin November 1, 2021. Bearca credits Deferred Revenue at the time of cash receipt. 7. On December 1, 2021, Bearcat pays $3,450 rent to the owner of the building. The payment represents rent for December 2021 through February 2022, at $1,150 per month. Prepaid Rent is debited at the time of the payment. Required: Record the necessary adjusting entries at December 31, 2021. No prior adjustments have been made during 2021. (Do not round Intermediate calculations. If no entry is required for a particular transaction/event, select "No Journal Entry Required in the first account field.)

Answer 1

Solution:

	Adjusting Journal Entries
	Date	Particulars	Debit	Credit
1	31-Dec	Depreciation expense Dr	$5,300
		To Accumulated Depreciation		$5,300
2	31-Dec	Salaries and wages expense	$2,300
		To salaries and wages payable		$2,300
3	31-Dec	Interest expense Dr ($11500*12%*10/12)	$1,150
		To Interest Payable
4	31-Dec	Insurance expense Dr ($11160*9/24)	$4,185
		To Prepaid Insurance		$4,185
5	31-Dec	Supplies expense Dr	$850
		To Supplies		$850
6	31-Dec	Deferred Revenue (2190*2/3)	$1,460
		To revenue		$1,460
7	31-Dec	Rent expense	$1,150
		To prepaid rent		$1,150