Question

Exercise 1 (5 points) Prepare general journal entries on December 31 to record the following unrelated year-end adjustments. a. Estimated depreciation on office equipment for the year, KD 5,000. b. The Prepaid Insurance account has a KD 4,680 debit balance before adjustment. An examination of insurance policies shows KD 950 of insurance expired (used). C. The Prepaid Insurance account has a KD 3.400 debit balance before adjustment. An examination of insurance policies shows KD 800 of unexpired insurance. d. The company has three office employees who each earn KD 100 per day for a five-day workweek that ends on Friday. The employees were paid on Friday, December 26, and have worked full days on Monday, Tuesday, and Wednesday, December 29, 30, and 31.hint: 3 days worked not paid yet) e. On November 1, the company received 6 months' rent in advance from a tenant whose rent is KD 1000 per month. The KD 6,000 was credited to the Unearned Rent Revenue account f. The company collects rent monthly from its tenants. One tenant whose rent is KD 750 per month has not paid his rent for December.

Answer 1

Answer :-

Journal entries are as follows :-

	Date	Particular	Debit	Credit
a)	Dec. 31	Deprecation expense - office equipment A/c Dr	KD 5,000
		To Accumulated depreciation -office equipment A/c		KD 5,000
		(To record depreciation on office equipment)
b)	Dec 31	Insurance Expense A/c. Dr.	KD 950
		To Prepaid Insurance A/c		KD 950
		(To record insurance expired in Prepaid Insurance)
c)	Dec 31	Insurance Expense A/c Dr	KD 2,600
		To Preferred Insurance A/c		KD 2,600
		(To record insurance expired in Prepaid Insurance)
		Explanation :-Total Prepaid Insurance = KD 3,400 and Unexpired Insurance = KD 800 Therefore, Insurance Expired = KD 3,400 - KD 800 = KD 2,600
			KD 900
d)	Dec 31	Salaries Expense A/c Dr..		KD 900
		To salaries Payable A/c (3 employees × 3days × KD 100 )
		(To record Salary paid to office employees)
e)	Dec 31	Unearned Rent A/c Dr	KD 2,000
		To rent earned A/c		KD 2,000
		(To record the rent earned for November and December month)
		Explanation :- It was given that on November 1, company received KD 6,000 as advance rent for 6month which is credited to Unearned Rent A/c .But in that amount there is earned rent for November and December month.And Rent per month is KD 1,000 Rent Earned = KD 1,000 × 2 month earned rent)
f)	Dec 31	Account Receivable A/c Dr.	KD 750
		To Rent Earned A/c		KD 750
		(To record the tenant not paid his rent for December)