Question

4419 Transactions/Adjusting Entries - due 02/03 Crane Department Store had the following information available at December 31, 2019. A) A 10%, $3,000 note payable was issued March 1, 2019. Under the terms of the note, the amount of the note plus interest is to be paid on February 29, 2020 B) Crane rents space to the Eric Co. for Gourmet Foods. On December 1, 2019, Eric Co. had prepaid rent for December 2019. January 2020, and February 2020. The entire amount was recorded unearned income (by Crane) when it was received. The total rent for three months was $300 On November 1, 2019, Crane purchased a two-year insurance policy for $4.800. The price amount had been recorded as insurance expense. D) Supplies costing $4,000 were purchased on January 1, 2019. The supplies were recorded as assets, supplies, when purchased. A year-end count of the supplies revealed that only $200 of supplies were still unused and remained in stock. E) Eileen's Heavenly Coffee rents part of the store (from Crane) for $800 per month. Eileen has not paid rent for the month of December 2019 and rent revenue has not yet been recorded

Answer 1

	Assets	=	liabilities	+	paid in capital	+	retained earning
1	3,00,000		0		3,00,000		0
2	30,000		30,000		0		0
3	90000		90000		0		0
4	50000		0		0		50000
5	-5000		-5000		0		0
6	0		0		0		0
7	-70000		-70000		0		0
8	0		0		0		0
9	-1000		0		0		-1000

Prepaid insurance decreases cash and increases prepaid expenses. Thus, no effect on asset.

Collection from customers have no effect as bills receivable are converted in cash and both are assets. One asset is being converted into other.