Question

2. Eastline Inc. at January 31, 2019, shows the following Eastline Inc Adjusted Trial Balance Partial) January 31, 2019 Credit Debit Supplies S 2,800 Prepaid Insurance 9.600 Salaries and Wages Payable Uneamed Revenue Supplies Expense 3.800 Insurance Expense Salaries and Wages Expense 7,200 Service Revenue $3,200 3,000 8,000 Instructions (20 pts) Answer the following questions, assuming the year begins January 1. (a) If the amount in Supplies Expense is the January 31 adjusting entry, and $3,400 of supplies was purchased in January, what was the balance in Supplies on January 1? (b) If the amount in Insurance Expense is the January 31 adjusting entry, and the original insurance premium was for one year, what was the total premium and when was the policy purchased? (c) If $10,000 of salaries was paid in January, what was the balance in Salaries and Wages. Payable at December 31, 2018? (d) If $6,400 was received in January for services performed in January, what was the balance in Unearned Revenue at December 31, 2018? 3. The following trial balance was taken from the books of David Hall Inc. on December 31, 2018. Account Debit Credit Cash $ 9,000 Accounts Receivable 40,000 Notes Receivable 10,000 Allowance for Doubtful Accounts $ 1,800 Inventory 34.000 Prepaid Insurance 4.800 Equipment 100,000 Accumulated Depreciation --Equip 15.000 Accounts Payable 10,800 Common Stock Retained Earnings 55,000 Sales Revenue 260,000 Cost of Goods Sold 126,000 Salaries and wages Expense 50,000 Rent Expense 12.800 $386.600 $386.600 44,000 Totals At year end, the following items have not yet been recorded. a. Insurance expired during the year, 52,000. b. Estimated bad debts, 1% of gross sales. c. Depreciation on equipment, 10% per year on original cost. d. Interest at 6% is receivable on the note for one full year. *e. Rent paid in advance at December 31, 55,400 (originally charged to expense). f. Accrued salaries and wages at December 31, 55,800 Instructions (a) Prepare the necessary adjusting entries. (20 pts) (b) Prepare the necessary closing entries. (15 pts)

Answer 1

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	Answer 1
	Supplies at end of January (31 January, 2019)	$          2,800
Add:	Supplies expenses	$          3,800
	Total supplies	$          6,600
Less:	Supplies purchased	$          3,400
	Supplies at beginning of January (1 January, 2019)	$          3,200
	Answer 2
	Monthly insurance expense	$          1,600
Multiply:	Number of months for insurance purchased	12
	Total premium	$       19,200
	Prepaid insurance at end of January (31 January, 2019)	$          9,600
Divided by:	Monthly insurance expense	$          1,600
	Number of months remaining to insurance expired	6
	It means the 6 months of insurance expired at the end of January (12-6)
	Inusurance purchased = Jan 31, 2019 Less 6 months
	Inusurance purchased = Aug 1, 2018	Aug 1, 2018
	Answer 3
	Salaries and wages payable at end of January (31 January, 2019)	$          3,200
Add:	Cash paid for Salaries and wages	$       10,000
	Total supplies	$       13,200
Less:	Salaries and wages expenses	$          7,200
	Salaries and wages payable at beginning of January (Dec 31, 2018)	$          6,000
	Answer 4
	Unearned revenue at end of January (31 January, 2019)	$          3,000
Add:	Revenue earned	$          8,000
	Total supplies	$       11,000
Less:	Cash received for service performed	$          6,400
	Unearned revenue at beginning of January (Dec 31, 2018)	$          4,600