prepare the adjustment entries CHAPTER 2 Review of the Accounting Process 93 Pre
ID: 2342613 • Letter: P
Question
prepare the adjustment entries
CHAPTER 2 Review of the Accounting Process 93 Prepare the necessary adjusting entries at December 31, 2018, for the Falwell Company for each of the following situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. 1. A three-year fire insurance policy was purchased on July 1, 2018, for $12.000. The company debited insur ing entries -5 ance expense for the entire amount 2 Depreciation on equipment totaled S15,000 for the year ployee salaries of $18,000 for the month of December will be paid in early January 2019 at 12% to be paid on April 30, 2019. space in Falwell's building. The payment, representing rent for December and January, was credited to 4. On November 1. 2018, the company borrowed $200,000 from a bank. The note requires principal and interest 5. On December 1, 2018, the company received $3,000 in cash from another company that is renting office deferred rent revenueExplanation / Answer
Solution:-
Adjustment entries:-
= 12,000 * (30 days / 3 years)
= 12,000 * (30 days / 36 months)
= 12,000 * (0.8330)
= $9996
= 200,000 * 12% *( 2 / 12 )
= 200,000 * 0.12 * 0.166
= 200,000 * 0.02
= $4000
= 3,000 * (1 / 2 )
= 3,000 * 0.5
= $1,500
1.Prepaid insurance= 12,000 * (30 days / 3 years)
= 12,000 * (30 days / 36 months)
= 12,000 * (0.8330)
= $9996
Insurance expense $9996 2.Depreciation expense $15,000 Accumulated depreciation $15,000 3.Salaries expense $18,000 Salaries payable $18,000 4.Interest expense= 200,000 * 12% *( 2 / 12 )
= 200,000 * 0.12 * 0.166
= 200,000 * 0.02
= $4000
Interest payable $4000 5. unearned rent revenue= 3,000 * (1 / 2 )
= 3,000 * 0.5
= $1,500
Rent revenue $1,500Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.