Question

The Righter Shoe Store Company prepares monthly financial statements for its bank. The November 30 and December 31, 2021, trial balances contained the following account information:

The following information also is known:

a. The December income statement reported $3,300 in supplies expense.

b. No insurance payments were made in December.

c. $16,500 was paid to employees during December for salaries.

d. On November 1, 2021, a tenant paid Righter $6,900 in advance rent for the period November through January. Deferred rent revenue was credited.

Required:

1. Using the above information for December, complete the T-accounts below. The beginning balances should be the balances as of November 30 .

2. Using the above information, prepare the adjusting entries Righter recorded for the month of December.

Answer 1

Requirement 1:

Supplies					Prepaid insurance
Beg. Bal.	$2,800				Beg. Bal.	$7,300
	$4,800	$3,300	a				$2,150	b
End. Bal.	$4,300				End. Bal.	$5,150
Salaries payable					Deferred Rent revenue
Beg. Bal.		$16,500			Beg. Bal.		$4,600
c	$16,500	$16,300			d	$2,300*
End. Bal.		$16,300			End. Bal.		$2,300

*Rent given in advance for 3 months is $6,900. So, rent for the month of December is $6,900/3 = $2,300.

Requirement 2:

	Date	Account title and Explanation	Debit	Credit
1	Dec.31,2021	Insurance expense	$2,150
		Prepaid insurance		$2,150
		[To record insurance expense]
2	Dec.31,2021	Salaries expense	$16,300
		Salaries payable		$16,300
		[To record accrued salaries expense]
3	Dec.31,2021	Deferred rent revenue	$2,300
		Rent revenue		$2,300
		[To record revenue from deferred revenue]

Answer 2

for supplies 

3300-2800= 500

500+ 4,300= 4800