Question

The following transactions occurred during December 31, 2021, for the Falwell Company. 1. A three-year fire insurance policy was purchased on July 1, 2021, for $9,360. The company debited insurance expense for the entire amount. 2. Depreciation on equipment totaled $10,250 for the year. 3. Employee salaries of $12,500 for the month of December will be paid in early January 2022. 4. On November 1, 2021, the company borrowed $110,000 from a bank. The note requires principal and interest at 12% to be paid on April 30, 2022 5. On December 1, 2021, the company received $3,600 in cash from another company that is renting office space in Falwell's building. The payment, representing rent for December, January, and February was credited to deferred rent revenue. 6. On December 1, 2021, the company received $3,600 in cash from another company that is renting office space in Falwell's building. The payment, representing rent for December, January, and February was credited to rent revenue rather than deferred rent revenue for $3,600 on December 1, 2021. Prepare the necessary adjusting entries for each of the above situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Adjusting entry

No	General Journal	Debit	Credit
1	Prepaid insurance (9360*30/36)	7800
	Insurance expense		7800
2	Depreciation expense	10250
	Accumulated depreciation-equipment		10250
3	Salaries expense	12500
	Salaries payable		12500
4	Interest expense (110000*12%*2/12)	2200
	Interest payable		2200
5	Deferred rent revenue (3600/3)	1200
	Rent revenue		1200
6	Rent revenue	2400
	Deferred rent revenue		2400