Question

Exercise 3-07 A partial adjusted trial balance of Marigold Company at January 31, 2020, shows the following. Credit MARIGOLD COMPANY ADJUSTED TRIAL BALANCE JANUARY 31, 2020 Debit Supplies $830 Prepaid Insurance 3,180 Salaries and Wages Payable Unearned Service Revenue Supplies Expense 950 Insurance Expense 530 Salaries and Wages Expense 1,930 Service Revenue $930 880 2,130 Answer the following questions, assuming the year begins January 1. 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? Beginning balance of supplies 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? Total premium When was the policy purchased? The policy was purchased on

Answer 1

Supplies beginning = ?

Supplies ending = $830

Supplies expense = $950

Supplies purchases = $850

Supplies expense = Supplies beginning + Supplies purchases - Supplies ending

950 = Supplies beginning + 850-830

Supplies beginning = $930

Insurance expense of January = $530

Annual insurance expense = 530 x 12

= $6,360

Prepaid insurance on January 31 = $3,180

On January 31, prepaid insurance is for = 3,180/530

= 6 months

Hence, on January 31, insurance expired for 6 months.

Total premium = $6,360

Policy was purchased on Augusts 1, 2019

Salaries paid in January = $2,630

Salaries and wages payable, beginning = ?

Salaries and wages expenses for January = $1,930

Salaries and wages payable, ending = $930

Salaries and wages payable ending = Salaries and wages payable, beginning + Salaries and wages expenses for January - Salaries paid in January

930 = Salaries and wages payable, beginning + 1,930-2,630

Salaries and wages payable, beginning = $1,630

Beginning unearned service revenue = ?

Cash received for January service revenue = $1,730

Ending unearned service revenue = $880

Service revenue for January = $2,130

Ending unearned service revenue = Beginning unearned service revenue + Service revenue for January - Cash received for January service revenue

880 = Beginning unearned service revenue + 2,130-1,730

Beginning unearned service revenue = $490

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