Question

a. On July 1, 2017, Lopez Company paid $3,200 for six months of insurance coverage. No adjustments have been made to the Prepaid Insurance account, and it is now December 31, 2017 b. Zim Company has a Supplies account balance of $9,000 on January 1, 2017. During 2017, it purchased $4,000 of supplies. As of December 31, 2017, a supplies inventory shows $1,800 of supplies available. Prepare the journal entries to reflect expiration of the insurance and correctly report the balance of the Supplies account and the Supplies Expense account as of December 31, 2017 View transaction list Journal entry worksheet 2 Record journal entry to reflect expiration of the insurance as of December 31, 2017. Note: Enter debits before credits Debit Credit General Journal Transaction View general journal Clear entry

Answer 1

1.

At the time of payment of payment of prepaid insurance the company passes following entry:

July 1, 2017	Prepaid Insurance a/c Dr	3200
	To Cash a/c		3200

Six months of insurance cover expires on 31 Dec, 2017. Hence the entry is:

Dec 31, 2017	Insurance Expense a/c Dr	3200
	To Prepaid Insurance a/c		3200

2.

Supplies a/c

Jan 1,2017	To bal b/d	9000	.	By Supplies expenses a/c (Bal fig)	11200
	To cash (purchases)	4000	Dec 31, 2017	By Bal c/d	1800
	Total	13000		Total	13000

Supplies expenses a/c

	To Suuplies a/c	11200	Dec 31,2017	By balance c/d (to be trfd to Profit and loss a/c )	11200
		11200			11200

So,

Supplies a/c: $ 1800

Supplies expense a/c: $ 11200.