Question

The following transactions occurred during December 31, 2018, for the Microchip Company. I. On October 1, 2018, Microchip lent $88,000 to another company. A note was signed with principal and 9% interest to be paid on September 30, 2019 2. On November 1, 2018, the company paid its landlord $8,700 representing rent for the months of November through January. Prepaid rent was debited. 3. On August 1, 2018, collected $14,700 in advance rent from another company that is renting a portion of Microchip's factory. The $14,700 represents one year's rent and the entire amount was credited to rent revenue. 4. Depreciation on office equipment is $5,400 for the year. 5. Vacation pay for the year that had been earned by employees but not paid to them or recorded is $8,900. The company records vacation pay as salaries expense 6. Microchip began the year with $2,900 in its asset account, supplies. During the year, $7,400 in supplies were purchased and debited to supplies. At year-end, supplies costing $3,700 remain on hand. Prepare the necessary adjusting entries for each of the above situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Adjusting entries

Date	account and explanation	debit	credit
Dec 31	Interest receivable (88000*9%*3/12)	1980
	Interest revenue		1980
	(To record accrued interest)
Dec 31	Rent expense (8700*2/3)	5800
	Prepaid rent		5800
	(To record rent expense)
Dec 31	Rent revenue (14700*7/12)	8575
	Unearned rent revenue		8575
	(To record unearned rent revenue)
Dec 31	Depreciation expense	5400
	Accumulated depreciation-office equipment		5400
	(To record dep)
Dec 31	Salaries expense	8900
	Salaries payable		8900
	(To record salaries expense)
Dec 31	Supplies expense (2900+7400-3700)	6600
	Supplies		6600
	(To record supplies)