Question

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Arnez Company's annual accounting period ends on December 31 2019. The following information concerns the adjusting entries to be recorded as of that date. a. The Office Supplies account started the year with a $4.000 balance. During 2019, the company purchased supplies for $13.400, which was added to the Office Supplies account. The inventory of supplies available at December 31 2019. totaled $2.554 b. An analysis of the company's Insurance policies provided the following facts. Policy Months of Coverage 24 36 12 Date of Purchase April 1, 2017 April 1. 2018 August 1, 2019 B C Cost $14,400 12.16 2,400 The total premium for each policy was paid in full for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years) c. The company has 15 employees, who earn a total of $1.960 in salaries each working day. They are paid each Monday for their work in the five-day workweek ending on the previous Friday. Assume that December 31, 2019. is a Tuesday, and all 15 employees worked the first two days of that week. Because New Year's Day is a paid holiday, they will be paid salaries for five full days on Monday, January 6, 2020, d. The company purchased a building on January 1, 2019. It cost $960,000 and is expected to have a $45,000 salvage value at the end of its predicted 30-year life. Annual depreciation is $30,500 e. Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at $3,000 per month, starting on November 1, 2019. The rent was paid on time on November 1, and the amount received was credited to the Rent Eamed account. However, the tenant has not paid the December rent. The company has worked out an agreement with the tenant, who has promised to pay both December and January rent in full on January 15. The tenant has agreed not to fall behind again. f. On November 1, the company rented space to another tenant for $2.800 per month. The tenant paid five months rent in advance on that date. The payment was recorded with a credit to the Unearned Rent account. Assume no other adjusting entries are made during the year Required: 1. Use the formation to prepare adjusting entries as of December 31, 2019 2. Prepare journal entries to record the first subsequent cash transaction in 2020 for parts cande Answer is not complete. Complete this question by entering your answers in the tabs below. equred2 Use the information to prepare adjusting entries as of December 31, 2019 Ne General Journal Debit Credit 14348 Office Suspense Office Supplies Insurance expense Prece 14846 OOOO 7.120 7 1200 3.3000 39203 . No Transaction Recorded Required 2 > & Prov Next >

Answer 1

Transaction	General Journal	Debit	Credit
a.	Office supplies expense	14,846		=4000+13400-2554
	Office supplies		14,846
b.	Insurance expense	7,120
	Prepaid insurance		7,120
c.	Salaries expense	3,920		=1960*2
	Salaries payable		3,920
d.	Depreciation expense—Building	30,500
	Accumulated depreciation—Building		30,500
e.	Rent receivable	3,000
	Rent earned		3,000
f.	Unearned rent	5,600		=2800*2
	Rent earned		5,600
Date	General Journal	Debit	Credit
6-Jan	Salaries payable	3,920
	Salaries expense	5,880		=1960*3
	Cash		9,800
15-Jan	Cash	6,000
	Rent receivable		3,000
	Rent earned		3,000

Insurance expense workings:
April 1, 2017	1800	=14400/24*3
April 1, 2018	4320	=12960/36*12
August 1, 2019	1000	=2400/12*5
Total	7120