Question

Analyzing an Adjusted Trial Balance

Below is an adjusted trial balance (partial) for Lazer Tag Inc. as of December 31, 2020.

Adjusted Trial Balance (Partial)
December 31, 2020
Acct. No.	Account	Debit	Credit
104	Accounts receivable	$40,000	$
106	Supplies	9,000
108	Prepaid insurance	7,600
160	Deferred revenue		6,600
202	Salaries payable		8,000
208	Interest payable		2,000
400	Sales revenue		800,000
405	Event revenue		19,800
502	Salaries expense	200,000
510	Supplies expense	7,000
515	Insurance expense	4,320
520	Interest expense	2,000

Additional information

a. Last year, a corporate client paid a 12-month event fee of $26,400 cash for one planned event per month at Lazer Tag to be applied over 12 months.
b. Supplies available on December 31, 2019, were $6,000.

c. A two-year insurance policy was purchased on September 1, 2020. The policy was paid in full on September 1, 2020. Premiums had increased from the prior policy.

Answer the following questions.

1. If interest expense related to six months of interest expense on a 10% note payable, what is the amount of the note payable?

$_____?

2. What was the adjusting journal entry to accrue unpaid, but incurred salaries, on December 31, 2020?

General Journal
Account Name	Dr.	Cr.
AnswerCashInventoryPrepaid InsuranceSuppliesAccounts PayableDeferred Service RevenueSalaries PayableService RevenueInsurance ExpenseSalaries ExpenseSupplies Expense	?	?
AnswerCashInventoryPrepaid InsuranceSuppliesAccounts PayableDeferred Service RevenueSalaries PayableService RevenueInsurance ExpenseSalaries ExpenseSupplies Expense	?	?

3. How many months remain in the 12-month corporate client contract?

____ months

4. What amount of supplies was purchased during 2020?

5. What was the price of the two-year insurance policy signed on September 1, 2020?

6. By how much did the current policy's monthly premium increase over the prior policy's monthly premium?

will up vote!!

thanks

Answer 1

$ 7,600 1. Interest Expenses Interest Rate Period 2000 10% 6 months 3. Total Corporate Client Contract Period Revenue per Month Deferred Revenue (Remained in trail balance) $ 26,400 12 Months $ 2,200 26400/12 $ 6,600 5. Here, Prepaid Insurance represents 20 months Insurance Expenses from Sep-Dec(4Months) =7600*4/20 =1520 (for 4 months) No.of Months deferred Revene left 3months 6600/2200 Here, A represents Notes Payable Interest Expenses =A*10%*6/12 2000 A*10%*6/12 A = 2000*12/6/10% =40000 Total Insurnace Expenses for Whole Year Insuarnce for 4 Months(Sep-Dec) Insuarnce for 8 Months(Jan-aug) $ 4,320 $-1,520 $ 2,800 4. Amount of Supplies Purchased in 2020 Ending Balance of Supplies Add; Supplies Expenses Less: Opening Balance Supplies Purchased = 2,00,000 $ $ $ $ 6,000 7,000 -9,000 4,000 2. Salaries Expenses $ Salaries Payable -9,000 Calculation of Total Insurane taken for 24 Months(2 Years) Insurance Expenses from Sep 2020-Dec2020 Prepaid Insurance in Trial Balance as Dec31, 2020 Total Insurance taken for Two years $ 2,00,000 $ 1,520 $ 7,600 $ 9,120 6. Insurance Expenses from Jan-Aug(4320-1520) No.of Months Insurance Expenses per Month Present Insurance Expenses per Month from Sep-Dec $ 2,800 8 Months $ 350 2800/8 $ 380 1520/4 Increase in Insuarance Premium is (380-350) $ 50