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 $1,750 7,000 $10,500 2,500 The following information is known for the month of December: 1. Purchases of supplies during December total $4,000. Supplies on hand at the end of December equal $3,250. 2. No insurance payments are made in December. Insurance cost is $1,750 per month. 3. November salaries payable of $10,500 were paid to employees in December. Additional salaries for December owed at the end of the year are $15,500. 4. On November 1, a tenant paid Golden Eagle $3,750 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.) No General Journal Credit Date December 31 Debit 3,250 x Cash Supplies 3,250 X 2 December 31 Insurance Expense December 31 December 31

Answer 1

Adjusting entries:

No.	Date	Account title and explanation	Debit	Credit
1	December 31	Supplies expense	$2,500
		Supplies		$2,500
		[To record supplies expense]
2	December 31	Insurance expense	$1,750
		Prepaid insurance		$1,750
		[To record insurance expense]
3	December 31	Salaries expense	$15,500
		Salaries payable		$15,500
		[To record accrued salaries expense]
4	December 31	Unearned revenue	$1,250
		Rent revenue		$1,250
		[To record rent revenue]

Calculations:

1. Supplies expense:

Supplies
Beginning balance	$1,750
Add:Purchases during the month	$4,000
(Less): Ending balance	($3,250)
Supplies used/Supplies expense	$2,500

2. Rent revenue:

Rent received in advance for 3 months (Nov. through Jan.) is total of $3,750.

So that rent revenue per month = 3,750 ÷ 3 months = $1,250.

Hence, rent revenue earned from unearned revenue for the month of December is $1,250.