Question

Che a. On December 31, 2019, the Notes Payable account at Northwood Manufacturing Company had a balance of $10,500. This balance represented a three-month, 10 percent note issued on November 1 b. On January 2, 2019, Hitech Computer Consultants purchased flash drives, paper, and other supplies for $6.440 in cash. On December 31, 2019, an inventory of supplies showed that items costing $1,680 were on hand. The Supplies account has a balance of $6,440 c. On September 1, 2019, North Dakota Manufacturing paid a premium of $14,280 in cash for a one-year insurance policy. On December 31, 2019, an examination of the insurance records showed that coverage for a period of four months had expired. d. On May 1, 2019, Headcase Beauty Salon signed a one year advertising contract with a local radio station and issued a check for $12,120 to pay the total amount owed. On December 31, 2019, the Prepaid Advertising account has a balance of $12,120. . For each of the above independent situations, prepare the adjusting entries that must be made on the December 31, 2019, worksheet assuming no previous adjusting entries have been made during the year. (Round your answers to 2 decimal places.) S55

Answer 1

1.

Interest expense = Note payable x interest rate x Time period

= 10,500 x 10% x 2/12

= $175

Date	General Journal	Debit	Credit
Dec 31, 2019	Interest expense	$175
	Interest payable		$175
	( To record interest expense)

2.

Supplies expense = Supplies purchased - Ending supplies

= 6,440-1,680

= $4,760

Date	General Journal	Debit	Credit
Dec 31, 2019	Supplies expense	$4,760
	Supplies		$4,760
	( To record supplies expense)

3.

Insurance expense for 4 months = 14,280 x 4/12

= $4,760

Date	General Journal	Debit	Credit
Dec 31, 2019	Insurance expense	$4,760
	Prepaid insurance		$4,760
	( To record insurance expense)

4.

Advertising expense for 8 months of 2019 = 12,120 x 8/12

= $8,080

Date	General Journal	Debit	Credit
Dec 31, 2019	Advertising expense	$8,080
	Prepaid advertising		$8,080
	( To record advertising expense)

Kindly give a positive rating if you are satisfied with this solution and please ask if you have any query.

Thanks