Question

On November 1, George prepaid for one year of insurance for $1,200. Record the following journal entries. Accounts used Cash, Prepaid Insurance, Insurance Expense. The prepayment on November 1. journal entry Accounts Debit Credit The adjustment for used insurance at December 31 (2 months). journal entry

Answer 1

(1). 1/11 Insurance Expenses A/c Dr. 1200

To Cash account. 1200

(Being insurance expenses paid for 1 month)

31/12. Prepaid Insurance A/c Dr. 1000

To insurance account. 1000

(Being Expenses açcounted )

(Prepaid Insurance=1200÷12×10)

(2). 1/10 Cash A/c Dr. 240

To subscription Revenue A/c. 240

(Being subscription Revenue received)

31/12. Subscription Revenue A/c Dr. 180

To Unearned Revenue A/C. 180

(Being unearned subscription accounted)

(Unearned Revenue= 240×9÷12)

(3). 31/12 Salary expenses A/c Dr. 4500

To Salary payable Account. 4500

(Being unpaid salary of last week açcounted)

6/1/2012 Salary expenses A/c Dr. 4500

Salary Payable A/c Dr. 4500

To Cash A/c. 9000

(Being salary expenses of current year and unpaid salary of last year is paid)

(4) 31/12. Interest Expenses A/c Dr. 200

To interest payable A/c. 200

(Being accrued interest of 2 months recorded)

( Interest Accrued = 1200×10%×2÷12)

30/01/2012. Notes payable A/c Dr. 1200

Interest Expenses Dr. 100

Interest payable A/c Dr 200

To Cash Account. 1500

(Being borrowed note açcount settled)

(Interest Expenses 1200×10%×1÷12)