Question

Information necessary to prepare the year-end adjusting entries appears below. Depreciation on the office equipment for the year is $10,000. Employee salaries are paid twice a month, on the 22nd for salaries earned from the 1st through the 15th, and on the 7th of the following month for salaries earned from the 16th through the end of the month. Salaries earned from December 16 through December 31, 2021, were $1,500. On October 1, 2021, Pastina borrowed $50,000 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years. On March 1, 2021, the company lent a supplier $20,000, and a note was signed requiring principal and interest at 8% to be paid on February 28, 2022. On April 1, 2021, the company paid an insurance company $6,000 for a two-year fire insurance policy. The entire $6,000 was debited to prepaid insurance. $800 of supplies remained on hand at December 31, 2021. A customer paid Pastina $2,000 in December for 1,500 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue. On December 1, 2021, $2,000 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $1,000 per month. The entire amount was debited to prepaid rent. Journal entries.

Answer 1

Adjusting entries

Date	account and explanation	debit	Credit
Dec 31	Depreciation expense	10000
	Accumulated depreciation-equipment		10000
dec 31	Salaries expense	1500
	Salaries payable		1500
Dec 31	Interest expense (50000*12%*3/12)	1500
	Interest payable		1500
Dec 31	Interest receivable (20000*8%*10/12)	1333
	Interest revenue		1333
Dec 31	Insurance expense (6000*9/24)	2250
	Prepaid insurance		2250
Dec 31	No other information
Dec 31	No adjusting entry
dec 31	Rent expense	1000
	Prepaid rent		1000