Question

a. The business has interest expense of $3,900 that it must pay early in January 2021. b. Interest revenue of $4,800 has been earned but not yet received. c. On July 1, 2020, when the business collected $13,600 rent in advance, it debited Cash and credited Unearned Rent Revenue. The tenant was paying for two years' rent. d. Salary expense is $6,300 per day—Monday through Friday—and the business pays employees each Friday. This year, December 31 falls on a Thursday. e. The unadjusted balance of the Supplies account is $3,500. The total cost of supplies on hand is $1,500. f. Equipment was purchased on January 1 of this year at a cost of $60,000. The equipment's useful life is five years. There is no residual value. Record depreciation for this year and then determine the equipment's book value.

Answer 1

Date	Account title	Debit	credit
a	Interest expense	3900
	Interest payable		3900
b	Interest receivable	4800
	Interest revenue		4800
c	Unearned rent revenue	3400
	Rent revenue		3400
	[Being rent earned for 6 months out of 24 months /2 years . 13600 *6/24 ]
d	salaries and wage expense	25200
	salaries and wage payable		25200
	[Being salary accrued for 4 days :6300*4]
e	Supplies expense	2000
	Supplies		2000
	[Being supplies used 3500-1500]
f	Depreciation expense	12000
	Accumulated depreciation -equipment		12000
	[Being depreciation expense for the year ]

working :

Depreciation expense =[cost -residual value ]/useful life

                   = [60000 -0 ]/ 5

                  = 12000

b)Book value = 60000 - 12000 = $ 48000