Question

Selected accounts of Ideal Properties, a real estate management firm, are shown below as of January 31, 2019, before any adjusting entries have been made.

			Debits		Credits
Prepaid insurance			$6,660
Supplies inventory			1,930
Office equipment			5,952
Unearned rent liability					$5,250
Salaries expense			3,100
Rent revenue					15,000

Monthly financial statements are prepared. Using the following information, record the adjusting entries necessary on January 31 (a) using the financial statements effect template and (b) in journal entry form.
1. Prepaid Insurance represents a three-year premium paid on January 1, 2019.
2. Supplies of $850 were still available on January 31.
3. Office equipment—purchased on January 1, 2019—is expected to last eight years.
4. On January 1, 2019, Ideal Properties collected six months’ rent in advance from a tenant renting space for $875 per month.
5. Accrued employee salaries of $490 have not been recorded as of January 31.

Record the adjusting entry made on January 31, 2019 for each of the above transactions.

General Journal
Date	Description	Debit	Credit
Jan. 31
	To record Transaction 1. adjusting entry.
Jan. 31
	To record Transaction 2. adjusting entry.
Jan. 31
	To record Transaction 3. adjusting entry.
Jan. 31
	To record Transaction 4. adjusting entry.
Jan. 31
	To record Transaction 5. adjusting entry.

Answer 1

Adjusting entries
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Insurance expense (6660*1/36)		185
	Prepaid insurance				185
	(for insurance expired)
b.	Supplies expenses (1930-850)		1080
	Supplies account				1080
	(for supplies used)
c.	Depreciation expense			62
	Accumulated dep-Equipment (5952*1/96)		62
	(for depreciation charged)
d.	Unearned rent liability			875
	Rental revenue				875
	(for rent earned)
e.	Salaries and wages expense		490
	Salaries and wages payable			490
	(for salaries expense incurred)