Question

A company has a fiscal year-end of December 31: (1) on October 1, $22,000 was paid for a one-year fire insurance policy: (2) on June 30 the company advanced its chief financial officer $20,000: principal and interest at 6% on the note are due in one year; and (3) equipment costing $70,000 was purchased at the beginning of the year for cash. Prepare Journal entries for each of the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 156 View transaction list Journal entry worksheet < 1 On October 1, $22,000 was paid for a one-year fire insurance policy. Note: Enter debits before credits Transaction General Journal Debit Credit 1 Record entry Clear entry View general journal

Answer 1

Journal
Date	Account Title and Explanation	Debit	Credit
Oct 1	Equipment	70000
	Cash		70000
	(To record purchase of equipment)
Jun 30	Advance Receivables	20000
	Cash		20000
	(To record advance to CEO)
Oct 1	Prepaid Insurance	22000
	Cash		22000
	(To record payment for insurance)
Dec 31	Interest Receivable (20000*6%/2)	600
	Interest Revenue		600
	(To record interest accrue on advance given)
Dec 31	Insurance Expense (22000*3/12)	5500
	Prepaid Insurance		5500
	(To record insurance Exp. For 3 months)