Arnez Company's annual accounting period ends on December 31. The following information concerns the adjusting entries to be recorded as of that date. a. The Office Supplies account started the year with a $2,625 balance. During the year, the company purchased supplies for $10,841, which was added to the Office Supplies account. The inventory of supplies available at December 31 totaled $2,310. b. The Prepaid Insurance account had a $27,744 debit balance at December 31 before adjusting for the costs of any expired coverage for the year. An analysis of prepaid insurance shows that $20,004 of unexpired insurance coverage remains at year- end. c. The company has 15 employees, who earn a total of $2,950 in salaries each working day. They are paid each Monday for their work in the five-day workweek ending on the previous Friday. Assume that December 31 is a Tuesday, and all 15 employees worked the first two days of that week. Because New Year's Day is a paid holiday, they will be paid salaries for five full days on Monday, January 6 of next year. d. The company purchased a building at the beginning of this year. It cost $955,000 and is expected to have a $45,000 salvage value at the end of its predicted 25-year life. Annual depreciation is $36,400. e. Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at $3,200 per month, starting on November 1. The rent was paid on time on November 1, and the amount received was credited to Rent Revenue. However, the tenant has not paid the December rent. The company has worked out an agreement with the tenant, who has promised to pay both December and January rent in full on January 31. f. On November 1, the company rented space to another tenant for $2,899 per month. The tenant paid five months' rent in advance on that date. The payment was recorded with a credit to the Unearned Revenue account. Assume no other adjusting entries are made during the year.
Arnez Company's annual accounting period ends on December 31. The following information concerns the adjusting entries to be recorded as of that date. a. The Office Supplies account started the year with a $2,625 balance. During the year, the company purchased supplies for $10,841, which was added to the Office Supplies account. The inventory of supplies available at December 31 totaled $2,310. b. The Prepaid Insurance account had a $27,744 debit balance at December 31 before adjusting for the costs of any expired coverage for the year. An analysis of prepaid insurance shows that $20,004 of unexpired insurance coverage remains at year- end. c. The company has 15 employees, who earn a total of $2,950 in salaries each working day. They are paid each Monday for their work in the five-day workweek ending on the previous Friday. Assume that December 31 is a Tuesday, and all 15 employees worked the first two days of that week. Because New Year's Day is a paid holiday, they will be paid salaries for five full days on Monday, January 6 of next year. d. The company purchased a building at the beginning of this year. It cost $955,000 and is expected to have a $45,000 salvage value at the end of its predicted 25-year life. Annual depreciation is $36,400. e. Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at $3,200 per month, starting on November 1. The rent was paid on time on November 1, and the amount received was credited to Rent Revenue. However, the tenant has not paid the December rent. The company has worked out an agreement with the tenant, who has promised to pay both December and January rent in full on January 31. f. On November 1, the company rented space to another tenant for $2,899 per month. The tenant paid five months' rent in advance on that date. The payment was recorded with a credit to the Unearned Revenue account. Assume no other adjusting entries are made during the year.
Century 21 Accounting Multicolumn Journal
11th Edition
ISBN:9781337679503
Author:Gilbertson
Publisher:Gilbertson
Chapter14: Accounting For Uncollectible Accounts Receivable
Section: Chapter Questions
Problem 1CP
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Transcribed Image Text:Arnez Company's annual accounting period ends on December 31. The following information concerns the adjusting entries to be
recorded as of that date.
a. The Office Supplies account started the year with a $2,625 balance. During the year, the company purchased supplies for
$10,841, which was added to the Office Supplies account. The inventory of supplies available at December 31 totaled $2,310.
b. The Prepaid Insurance account had a $27,744 debit balance at December 31 before adjusting for the costs of any expired
coverage for the year. An analysis of prepaid insurance shows that $20,004 of unexpired insurance coverage remains at year-
end.
c. The company has 15 employees, who earn a total of $2,950 in salaries each working day. They are paid each Monday for their
work in the five-day workweek ending on the previous Friday. Assume that December 31 is a Tuesday, and all 15 employees
worked the first two days of that week. Because New Year's Day is a paid holiday, they will be paid salaries for five full days on
Monday, January 6 of next year.
d. The company purchased a building at the beginning of this year. It cost $955,000 and is expected to have a $45,000 salvage
value at the end of its predicted 25-year life. Annual depreciation is $36,400.
e. Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at $3,200 per month,
starting on November 1. The rent was paid on time on November 1, and the amount received was credited to Rent Revenue.
However, the tenant has not paid the December rent. The company has worked out an agreement with the tenant, who has
promised to pay both December and January rent in full on January 31.
f. On November 1, the company rented space to another tenant for $2,899 per month. The tenant paid five months' rent in
advance on that date. The payment was recorded with a credit to the Unearned Revenue account.
Assume no other adjusting entries are made during the year.
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