Question

Golden Eagle Company prepares monthly financial statements for its bank. The November 30 adjusted trial balance includes the following account information: Supplies Prepaid Insurance Salaries Payable Deferred Revenue November 30 Debit Credit $1,500 6,000 $10,000 2.000 The following information is known for the month of December 1. Purchases of supplies during December total $3,500. Supplies on hand at the end of December equal $3,000. 2. No insurance payments are made in December Insurance cost is $1,500 per month 3. November salaries payable of $10,000 were paid to employees in December. Additional salaries for December owed at the end of the year are $15,000. 4. On November 1, a tenant paid Golden Eagle $3.000 in advance rent for the period November through January, and Deferred Revenue was credited for the entire amount. Required: Show the adjusting entries that were made for supplies, prepaid insurance, salaries payable, and deferred revenue on December 31 (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list View journal entry worksheet General Journal Debit Credit No 4 Date December 31 No Transaction Recorded

Answer 1

Solution:

No.	Date	General Journal	Debit	Credit
1	Dec. 31	Supplies Expense ($1500 + $3500 - $3000)	$                  2,000
		Supplies		$          2,000
		(Being supplies expense )
2	Dec. 31	Insurance Expense ($ 1,500 per month)	$                  1,500
		Prepaid Insurance		$          1,500
		(Being Insurance expense )
3	Dec. 31	Salaries Expense	$                15,000
		Salaries payable		$        15,000
		(Being salaries payable )
4	Dec. 31	Deferred Revenue ($ 3,000 / 3 months)	$                  1,000
		Rent Revenue		$          1,000
		(Being Insurance expense )

Notes:

1) In 2nd transaction, we have to recognize December month insurance expense which was paid earlier.

2) In 4th transaction, Rent was received for 3 months in November beginning, so we have recognize December month rent revenue which was received earlier. ($ 3,000 / 3 months).

3) Supplies Expense = Beginning Balance + Purchases - Closing Balance = $1500 + $3500 - $3000 = $ 2000