Question

1. The company paid $18,000 for a one year lease that commenced on 9/1/20. 2. The company received $25,000 in advance for services to be rendered in the future. As of 12/31/20 the company had earned $15,000. 3. The company paid $9,000 for a 1 year fire policy with an effective date of April 1, 2020. 4. During the year the company purchased $1,400 in supplies of which $400 remain on hand 12/31/20. 5. Buildings has a $70,000 salvage value and a 20 year life. 6. Equipment has a $30,000 salvage value and a 10 year life. 7. The company received a $40,000, 6%, 6 month note from a customer on 11/1/20. 1.) Record the adjusting entry for 12/31/20. 2.) Record the receipt of payment 4/30/21 with and without reversing entries.

Prepare adjusting entries If the original entries were recorded to a temporary and permanent account.

Answer 1

Answer:

Si.no	Particulars	Debit	Credit	Remarks
1	Prepaid Rent Expenses A/c	$ 12,000		(18,000*8/12)
	To Rent Expenses A/c		$ 12,000
	(To Record Prepaid Lease)
2	Sales Revenue A/c	$ 10,000
	To Unearned Revenue A/c		$ 10,000	($25,000 - $15,000)
	(To Record Earned Revenue for Which Advance was Received Earlier)
3	Prepaid Insurance A/c	$   2,250		($9,000 * 3/12)
	To Insurance Expense A/c		$   2,250
	(To record Prepaid Insurance)
4	Supplies Expenses A/c	$   1,000		($1,400 - $400)
	To Supplies A/c		$   1,000
	(To Record Supplies Used)
5	Depreciation - Buildings A/c	$   2,500		($120,000 - $ 70,000)/20
	To Accumulated Depreciation Buildings A/c		$   2,500
	(To Record Depreciaiton on Buildings)
6	Depreciation - Equipment A/c	$ 12,000		($150,000 - $ 30,000)/10
	To Accumulated Depreciation - Equipment A/c		$ 12,000
	(To Record Depreciaiton on Equiment)
7	Interest Recievable A/c	$       400		($40,000 * 6%*2/12)
	To Accured Interest A/c		$       400
	(To Record Intrest Accured on Notes Payable)

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