Question

Connect G Who is supposi X G , before trial, ex Lab Video: Cox Terms of Servix Cunningham azto.mheducation.com/ext/map/index.html?_con-con&external browser=0&launchurahttp%253A%252F%252Fims.mheducation.com%2 er 4 Homework Seved Fes Company is making adjusting Journal entries for the year ended December 31, 2018. In developing information for Journal entries, you learned the following: 2. A two-year insurance premium of $7,400 was paid on January 1, 2018, for coverage beginning on that date. As of De 2018, the unadjusted balances were $7,400 for Prepaid Insurance and $0 for Insurance Expense. b. At December 31, 2018, you obtained the following data relating to supplies. Unadjusted balance in Supplies on December 31, 2018 Unadjusted balance in Supplies Expense on December 31, 2018 Supplies on hand, counted on December 31, 2018 $16.000 74,000 10,800 Required: 1. Of the $7.400 paid for insurance, what amount should be reported on the 2018 income statement as Insurance Exper amount should be reported on the December 31, 2018, balance sheet as Prepaid Insurance? 2. What amount should be reported on the 2018 income statement as Supplies Expense? What amount should be repor December 31, 2018, balance sheet as Supplies? 3. Indicate the accounting equation effects of the adjustment required for (a) insurance and (b) supplies. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What amount should be reported on the 2018 Income statement as Supplies Expense? What amount should be reported on the December 31, 2018, balance sheet as Supplies? Supplies Expense Supplies Prex 1 of 10 Next >

Answer 1

1 Step 1 2 Step 2 Step 3 Insurance premium paid (01/01/2018) for period (01/01/2018 - 31/12/2019) (i) $7400 Insurance premium for Que day () = (365+365) day (0) $10.14 Insurance Expenses for 365 days (0110112018-31/12/2018) (ii) x36s in $ 3700 Step 4 Prepaid Amount to be transfer to Belone sheet for (01/01/2018 - 31/12/2014) () $3700 (i) — (ii) Answers: Amount to be reported in Income Statement of Year 2018 as Insurance Expenses will be $ 3700 (Refer Step 3 above) Amount to be reported as Prepaid Insurance in Balance sheet for the year ended ou 31st Decembar 2018 will be $3700 (Refer Step 4 above) and for Income Stetement of 2019 this amover $3700 be shown as Insurance Expense". wiu

PAGE NO.: DATE: 2 I for Yeer 2018, the following should be reported :- Step 1 Unadjusted balances in supplies au 31/12/18 $16000 Should be reported under Income need of Inome Stefensent Step 2 unddjusted balances in supplies expenses $ 74000 should be shown as expenses head of Income tetement as ou 31/12/18 Step 3 Supplies ou hand, counted au 31/12/18 $ 10,800 should be shown as Income head as Stock an hord 31/12/18 and abo is is shown as Stock in Hand in Balance Sheets Assets side. Auswers: Amount to be shown in Income Estetement Expenses Supplies Expenses (Not of suppiles) Step 2 - Step 1 ( $ 74000 – $16000) = $58,000 side Income side $10800 supplies on hand as stock in Hand (as per Step 3) Amount to be shown in Asset in Belen a Sheet Supplies ou hand as Stock in Hand a $ 10800 (as per Step 3)

PAGE NO.: DATE: 3 Accounting Eaquarious effects : (a) Insurance Assets $3400 (Prepaid "Insurance) = liabilities & Capital 0+ $3400 (Decrease in profit due to increase in Insurance Expenses b) Supplies Assets Liabilities + Capital + $68800 0 thor. $ 68800 (Decreas ($10800 Supplies in tand) in profit due to ($ 74000 – $16000) Expenses tranand Income as per Rule Debit all decreased and Expenses Expenses Increase