Question

PRALIL for each of the following independent situations Compute the amounts indicated for each of th. Situation A B 1 ? $1.300 $600 $3,300 $2.500 54 300 52.600 Beginning prepaid insurance balance Cash payments for insurance during the year Ending prepaid insurance balance Insurance expense on the income statement $600 $1,400 $2,600 $4,250 $1,700 $1,150 ? ed account balances and adjustment data are for Global Advertising. on Dec.31: PRACTICE QUESTION 2 The following unadjusted account balances a $14,000 15,500 1,600 5,500 Cash Prepaid insurance 3,000 Office supplies 900 Office equipment Accumulated amort.-office equipment4,500 Accounts payable Salary payable Unearned service revenue Bill Johnson, Capital 14,900 Bill Johnson, Withdrawals Service revenue Salary expense 11,800 Amort, expense-office equipment 0 Supplies expense Insurance expense 11,000 29,700 Adjustment data: Office supplies on hand December 31, 2019, $500 Prepaid insurance expired during 2019, $275 Unearned service revenue, December 31, 2019, $1,500 Amortization on equipment for 2019, $2,800 Accrued salaries, $1,800

Answer 1

Solution for Question 1:-

Computing the amounts of the following Independent situations:-

	Situation
	A	B	C	D
Beginning Prepaid Insurance balance	$1,500	$1,300	$600	$3,300
Cash Payments for Insurance during the year	$2,500	$4,650	$4,300	$2,600
Ending Prepaid Insurance balance	$1,400	$4,250	$3,750	$600
Insurance Expense on the Income Statement	$2,600	$1,700	$1,150	$5,300

Beginning Prepaid Insurance+ Cash Payments for Insurance during the year=Ending Prepaid Insurance balance+Insurance Expense on the Income Statement.

With the help of above Equation we calculate the missing amount.

For Example:-

1. Beginning Prepaid Insurance balance=(Ending Prepaid Insurance balance+Insurance Expense on the Income Statement) - Cash Payments for Insurance during the year

=($1,400+$2,600)-$2,500

=($4,000-$2,500)

=$1,500

2. Cash Payments for Insurance Expense=(Ending Prepaid Insurance balance+Insurance Expense on the Income Statement)- Beginning Prepaid Insurance balance

=($4,250+$1,700)-$1,300

=($5,950-$1,300)

=$4,650

3. Ending Prepaid Insurance balance=(Beginning Prepaid Insurance balance+ cash payments for Insurance during the year)- Insurance Expense on the Income Statement

=($600+$4,300)-$1,150

=($4,900-$1,150)

=$3,750

4. Insurance Expense on the Income Statement=(Beginning Prepaid Insurance balance+ Cash Payments for Insurance during the year)- Ending Prepaid Insurance balance

=($3,300+$2,600)-$600

=($5,900-$600)

=$5,300

Solution for Question 2:-

Preparing Worksheet :-

Global Advertising

Worksheet

December 31

Accounts	Unadjusted	Trial Balance	Adjustments		Adjusted	Trial Balance
	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$14,000				$14,000
Prepaid Insurance	3,000			275	2,725
Office Supplies	900			400	500
Office Equipment	15,500				15,500
Accumulated amort.., Office Equipment		$4,500		2,800		$7,300
Accounts Payable		1,600				1,600
Salary Payable		0		1,800		1,800
Unearned Service Revenue		5,500	4,000			1,500
Bill Johnson, Capital		14,900				14,900
Bill Johnson, Withdrawals	11,000				11,000
Service Revenue		29,700		4,000		33,700
Salary Expense	11,800		1,800		13,600
Amort. Expense, Office Equipment	0		2,800		2,800
Supplies Expense	0		400		400
Insurance Expense	0		275		275
Totals	$56,200	$56,200	$9,275	$9,275	$60,800	$60,800

Working Notes:-

1. Supplies Expense=(Office Supplies Available - Office Supplies at the end)

=($900-$500)

=$400

2. Prepaid Insurance Expired by $275, so Debit the Insurance Expense and Credit the Prepaid Insurance by $275 .

3. Unearned Service Revenue at the end is $1,500 which means $4,000 ($5,500-$1,500) earned during the year. So Debit the Unearned Service Revenue and Credit the Service Revenue by $4,000.

4. Amortization Expense on Equipment is $2,800. So Debit the Amortization Expense and Credit the Accumulated Amortization by $2,800.

5. Accrued Salaries of $1,800. So Debit the Salary Expense and Credit the Salary Payable by $1,800.