Question

E3-7 A partial adjusted trial balance of Piper Company at January 31, 2020, shows the following. PIPER COMPANY ADJUSTED TRIAL BALANCE JANUARY 31, 2020 Credit Debit $ 700 Supplies Prepaid Insurance 2,400 Salaries and Wages Payable $ 800 750 Unearned Service Revenue Supplies Expense Insurance Expense 950 400 Service Revenue 2,000 Instructions Answer the following questions, assuming the year begins January 1. (a) If the amount in Supplies Expense is the January 31 adjusting entry, and $850 of supplies was purchased in January, what was the balance in Supplies on January 1? (b) If the amount in Insurance Expense is the January 31 adjusting entry, and the original insurance premium was for one year, what was the total premium and when was the policy purchased? (c) If $2,500 of salaries was paid in January, what was the balance in Salaries and Wages Payable at December 31, 2019? (d) If $1,600 was received in January for services performed in January, what was the balance in Unearned Service Revenue at December 31, 2019?

Answer 1

(a)	The Balance in Supplies on January 1	$800
	($950 + $700 - $850)
(b)	The total premium was	$4,800
	($400 x 12 months)
	Policy purchase on August 1, 2019
	Prepaid Insurance, 1/31	$2,400
	Monthly premium	$400
	Number of months remaining	6
(c)	Salary and Wages Payable at Decemeber 31, 2019	$1,500
	Cash Paid	$2,500
	Salaries and wages payable, 1/31	$800
		$3,300
	Less: Salaries and wages expense	$1,800
	Salaries and wages payable, 12/31/19	$1,500