Question

Save & Ext The following information applies to the questions displayed below) Aubrae Company is making adjusting entries for the year ended December 31 of the current year. In developing information for the adjusting entries, the accountant learned the following a. A two year insurance premium of 54,800 was paid on October 1 of the current year for coverage beginning on that date. The bookkeeper debhede Mamount to Prepeldimance on October b. Al December 31 of the current year, the following data relating to Shipping Supplies were obtained from the records and supporting documents. Shipping supplies on hand, January 1 of the current year Purchases of shipping supplies during the current year Shipping supples on hand, counted on December 31 of the current year $ 16000 66.500 11.500 5. Required into 10.00 points Required 1. Record the adjusting entry for insurance at December 31 of the current year. (Do not round intermediate calculations. I no entry is required for a transaction event, select "No journal entry required in the first account field.)

Answer 1

1)

transaction	general journal	debit $	credit $
1	insurance expense	600
	prepaid insurance		600

insurance expense is an expense account which should be debited when it increases.prepaid insurance is an asset account which should be credited when it decreases.

the insurance amount for 2 year is $4800, that is for 24 months period.during the year only 3 months expense is realised (october 1 to december 31). so the insurance expense=($4800/24)*3=$600

2)

transaction	general journal	debit $	credit $
2	supplies expense	66000
	shipping supplies		66000

supplies expense is an expense account which should be debited when it increases.shipping supplies is an asset account which should be credited when it decreases.

supplies expense for the year=begining balance + purchase of supplies - balance on hand,

supplies expense for the year=$11000+$66500-11500=$66000

3) amount reported on the current year income statement.

	$
prepaid insurance	600
shipping supplies	66000

the insurance amount for 2 year is $4800, that is for 24 months period.during the year only 3 months expense is realised (october 1 to december 31). so the insurance expense=($4800/24)*3=$600

supplies expense for the year=begining balance + purchase of supplies - balance on hand,

supplies expense for the year=$11000+$66500-11500=$66000

4) amount reported on the current year balance sheet

	$
prepaid insurance	4200
shipping supplies	11500

balance on the prepaid insurance=$4800-$600=$4200

balance os shipping supplies on hand at 31 december is $11500