Question

1. Journal Entries

a) On September 1st, 2019, Jessica’s Jellybean Company prepaid the annual insurance policy for $4,800. Prepare the adjusting entry that would be required at December 31st, 2019 (the end of the accounting period)

b) What will the balance of the pre-paid insurance account on the balance sheet of the company at December 31st, 2019

c) The beginning balance of supplies was $1,000. On September 1st , the company purchase $5,000 in the office supplies on credit. At the end of the period, there were only $500 of supplies remaining remaining in the supply closet. Prepare the journal entries required on September 1st and at December 31st

d) The company sold $5,000 jellybeans prices at $15 each. Most of the customers paid with cash, however 1,000 jellybeans were sold on credit. The cost of the jellybeans was $10 each. Make appropriate journal entries.

Answer 1

a) Adjusting entry

Date	account and explanation	Debit	Credit
Dec 31	Insurance expense (4800/12*4)	1600
	Prepaid insurance		1600

b) balance in prepaid account = 4800-1600 = 3200

c) Journal entry

Date	account and explanation	Debit	Credit
Sep 1	Office supplies	5000
	Account payable		5000
Dec 31	Supplies expense (6000-500)	5500
	Office supplies		5500

d) Journal entry

Date	account and explanation	Debit	Credit
	Cash (4000*15)	60000
	Account receivable	15000
	Sales revenue		75000
	Cost of goods sold	50000
	Inventory		50000