Question

Markham Industries is completing the accounting process for the year just ended, December 31, 2018. The transactions during 2018 have been analyzed, journalized and posted to the general ledger. The data below with respect to adjusting entries are available. Identify each transactions as a deferred revenue, deferred expense, accrued revenue, or accrued expense. Also, identify the appropriate account(s) to be debited and credited. One-third of the basement space is rented to Howard Specialty Shop for $1,640 per month, payable monthly. On December 31, 2018, the rent for November and December 2018 had not been collected or recorded. Collection is expected January 10, 2019. Choose... On June 1, 2018, a two-year insurance premium amounting to $2,760 was paid in cash and debited in full to Prepaid Insurance. Coverage began on June 1, 2018 Choose... The remaining basement of the store is rented for $1,500 per month to another merchant, M. Crier, Inc. Crier sells compatible, but not competitive, merchandise. On November 1, 2018, the store collected six months' rent in the amount of $9,000 in advance from Crier; it was credited in full to Unearned Revenue when collected. Choose... Wages earned by employees during December 2018, unpaid and unrecorded at December 31, 2018, amounted to $8,250. The last payroll was December 28; the next payroll will be January 6, 2018. Choose...

Answer 1

Two months rent receivable for November and December is = (1640*2) Two months rent receivable for November and December is = $ 3,280/. It is accrued revenue for two months Accrued Revenue: Dr. Accounts receivable $ 3,280, Cr. Revenue $ 3,280 Monthly insurance expense is = (2760/24) Monthly insurance expense is = $ 115/. Expired insurance months is = June to December = 7 months = (1157) = $ 805/. So, Insurance expense is debited for $ 805 and Prepaid insurance is credited for $ 805 Deffered expense: Dr. Insurance expense $ 805, Cr. Prepaid Insurance $ 805 Two months November and December, rent revenue is accrued and it has to be recognised Rent revenue to be recognised for two months expired is = (1500-2) = $ 3,000/. Deffered revenue: Dr. Unearned rent revenue $ 3,000 and Cr. Rent revenue for $ 3,000 It is accrued expenses for Wages for December months amounting to $ 8,250 Accrued expenses entry to be made as Wages expense $ 8,250 and Wages payable is to be credited for $ 8,250 Accrued expenses, Dr. Wages expense $ 8,250 and Cr. Wages payable $ 8,250