Question

adjusting entries

Prepare only the adjusting entries for the month of June based on the following information: 1. Equipment costing $48,000 has an estimated useful life of 4 years with no estimated value at the end of 4 years. 2. A loan of $36,000 was taken out on June 1st. The loan is to be repaid in 24 months including interest at 5% annually. 3. $1,350 of office supplies was purchased during June; at the end of June $840 of supplies were still on hand. 4. A business insurance policy had been renewed on January 1st and the annual premium in the amount of $3,300 was paid in full when the policy was renewed in January. 5. Salaries earned by employees at the end of June amounted to $1,950, these salaries are due for payment on July 1s.

Answer 1

S.NO. General Jornal Debit Credit 1 $ 1,000 $ 1,000 Depreciation expense Accumulated depreciation - equipment (Deprecition for the month of June recorded) 2 $ 150 $ 150 Interest expense Interest payable (Interest on loan for the month of June recorded) 3 $ 510 Supplies expense Supplies (Supply expenses for June recorded) $ 510 4 $ 1,650 $ 1,650 Insurance expense Prepaid Insurance insurance expense from January to June recorded) $ 1,950 $ 1,950 Salaries expenses Salaries payabe (Salaries expense for the month of June recorded)

Working Notes: a) Depreciation expense for June = ( $48000 - $0)/48 months = $ 1,000 b) Interest on loan for June = $ 36000 * 5 %/12 = $ 150 c) Supllies expense = $ 1350 - $ 840 $ 510 d) Insurance expenses-Jan to June = $ 3300 /2 = $ 1,650