Question

Arnez Company's annual accounting period ends on December 31, 2019. The following information concerns the adjusting entries to be recorded as of that date. a. The Office Supplies account started the year with a $3.950 balance. During 2019, the company purchased supplies for $16,314, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2019, totaled $3,476. b. An analysis of the company's insurance policies provided the following facts. Policy Months of Coverage Date of Purchase April 1, 2017 April 1, 2018 August 1, 2019 $11,544 10, 296 9,144 The total premium for each policy was paid in full for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years.) c. The company has 15 employees, who earn a total of $2,700 in salaries each working day. They are paid each Monday for their work in the five-day workweek ending on the previous Friday. Assume that December 31, 2019. Is a Tuesday, and all 15 employees worked the first two days of that week. Because New Year's Day is a paid holiday, they will be paid salaries for five full days on Monday, January 6, 2020. d. The company purchased a building on January 1, 2019. It cost $640,000 and is expected to have a $45.000 salvage value at the end of its predicted 40-year life. Annual depreciation is $14,875 e. Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at $2.700 per month, starting on November 1, 2019. The rent was paid on time on November 1, and the amount received was credited to the Rent Earned account. However, the tenant has not paid the December rent. The company has worked out an agreement with the tenant, who has promised to pay both December and January rent in full on January 15. The tenant has agreed not to fall behind again. f. On November 1, the company rented space to another tenant for $2.446 per month. The tenant paid five months' rent in advance on that date. The payment was recorded with a credit to the Unearned Rent account. Assume no other adjusting entries are made during the year

Answer 1

From the information given above, I have Arnez Company Adjusting entries for the period ending December 31, 2019.

Arnez Company Adjusting entries for the period ending December 31, 2019. Dr 16314 Particulars 5 a Office Supplies Account To Cash Account (purchase of office supplies) Particulars Dr Cr C. Insurance 3810 Prepaid Insurance 5334 To Cash Account 9144 (Purchased insurance on August 1,2019 for 12 month, cost 9144 From August 1, 2019 to July 31, 2020 For Aug 2019 to Dec 2019, 9144*5/12=3810) 16314 16788 16788 Supplies expense To Office Supplies Account (Opening balance Add: Purchases Less: Closing Balance Supplies expense 3950 16314 3476 16788 C Salary Account 202500 To Cash Account 202500 (For previous weeks's 5 working day is paid on coming monday Previous week's salary paid on 30 Dec being Monday 15 employees *$2700 per working day* 5days=202500) 14 15 16 b Salary Account 81000 To Salary Payable 81000 (Dec 31, 2019 being Tuesday, Salary accrued on Dec 30 and Dec 31 2019 15 employees*$2700 per working day* 2days=81000) A. Insurance Account 1443 To Prepaid Insurance 1443 (Purchased insurance on April 1, 2017, for 24 month, cost 11544 From April 1, 2017 to March 31, 2019 For Jan 2019 to March 2019, 11544*3/24=1443) 18 19 20 Building Account 640000 To cash/ Account receivable (purchase of building on January 1,2019) 640000 24 25 26 B. Insurance Account 3432 To Prepaid Insurance 3432 (Purchased insurance on April 1, 2018, for 36 month, cost 10296 From April 1, 2018 to March 31, 2021 For Jan 2019 to Dec2019, 10296*12/36= 3432) Depreciation 14875 To Accumulated depreciation 14875 (given in the problem, annual depreciation=14875)

N m 1 Particulars Dr Cr 2 e Cash Account 2700 To Rent earned Account 2700 (on November 1, 2019, rented space to tenant for $2700, november month rent received n o N o 13 Rent Receivable Account 2700 To Rent earned Account 2700 9 (December 2019 rent is accrued not yet received) 10 11 f Cash Account 12230 12 To Rent earned Account 4892 To Unearned Rent Account 7338 14 (on November 1, 2019, rented space to anoth tenant for 15 $2446, received 5 months rent in advance 2446*5 month = 12230 16 Nov 2019 to dec 2019 - 12230*2month/ 5 months =4892 17 Unearned rent Accout= 12230-4892=7338) 18 19 20