Question

The following transactions occurred during December 31, 2021, for the Folwell Company 1. A three-year fire insurance policy was purchased on July 1, 2021, for $9,720. The company debited insurance expense for the entire amount. 2. Depreciation on equipment totaled $10,500 for the year. 3. Employee salaries of $13,000 for the month of December will be paid in early January 2022. 4. On November 1, 2021, the company borrowed $120,000 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 $3,900 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 $3,900 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 $3,900 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

Answer: Debit Credit No. Date Dec 31 8,100 8,100 Dec 31 10,500 10,500 Dec 31 13,000 General Journal Prepaid Insurance ($9,720 * 30/36) Insurance Expense Depreciation Expense Accumulated Depreciation Salaries Expense Salaries Payable Interest Expense ($120,000 * 12% * 2/12) Interest Payable Deferred Rent Revenue ($3,900 * 1/3) Rent Revenue Rent Revenue ($3,900 * 2/3) Deferred Rent Revenue 13,000 4. Dec 31 2,400 2,400 Dec 31 1,300 1,300 Dec 31 2,600 2,600