Question

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 $4,500 balance. During 2019, the company purchased supplies for $18,585, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2019, totaled $3,960. b. An analysis of the company's insurance policies provided the following facts. Policy A B Date of Purchase April 1, 2017 April 1, 2018 August 1, 2019 Months of Coverage 24 36 12 Cost $10,464 9,216 8,064 с 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 $1,600 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 $920,000 and is expected to have a $45,000 salvage value at the end of its predicted 30-year life. Annual depreciation is $29,167. e. Since the company is not large enough to occupy the ntire building it owns, it rented space to a tenant at $2 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 Earned 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 $2,265 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.

Answer 1

Requirements: Preparation of Journal Entries as of December 31, 2019 Date AccountTitles & explanation Dec-31 Supllies Expense (4500+18585-3960) $ To Office Supplies Credit Debit 19,125 $ 19,125 $ 7,740 $ $ 7,740 Dec-31 Insurance Expense To Prepaid Insurance A = $10464/24*3 = $1308 B = $9216/36*12 = $3072 C = $8064/12*5 = $3360 $ $ $ 1,308 3,072 3,360 $ Dec-31 Salaries and wages Expense ($1600*2] To Salaries and wages payable 3,200 $ 3,200 $ 29,167 Dec-31 Depreciation Expense To Accumulated Depreciation- Building $ 29,167 $ 2,500 Dec-31 Rent Receivable To Rent Earned $ 2,500 $ Dec-31 Unearned rent ($2265*2) To Rent Earned 4,530 $ 4,530 Credit Requirement2: Date AccountTitles & explanation Jan-06 Salaries and wages payable ($1600*2) Salaries and wages expense ($1600*3) To Office Supplies $ $ Debit 3,200 4,800 $ 8,000 $ 5,000 Jan-15 Cash To Rent Receivable To Rent Earned ATA 2,500 2,500 * Kindly Comment down for any clarifications/ queries and please upvote.