The following transactions occurred during December 31, 2021, for the Falwell Company. A three-year fire insurance policy was purchased on July 1, 2021, for $12,240. The company debited insurance expense for the entire amount.Depreciation on equipment totaled $12,250 for the year.Employee salaries of $16,500 for the month of December will be paid in early January 2022.On November 1, 2021, the company borrowed $190,000 from a bank. The note requires principal and interest at 12% to be paid on April 30, 2022.On December 1, 2021, the company received $6,000 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December, January, and February was credited to deferred rent revenue.On December 1, 2021, the company received $6,000 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December, January, and February was credited to rent revenue rather than deferred rent revenue for $6,000 on December 1, 2021. 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.

Adjusting entry: At the end of the year if the any transaction is not recorded then it passed the…

Answered: The following transactions occurred…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 6P

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The following transactions occurred during December 31, 2021, for the Falwell Company.

A three-year fire insurance policy was purchased on July 1, 2021, for $12,240. The company debited insurance expense for the entire amount.
Depreciation on equipment totaled $12,250 for the year.
Employee salaries of $16,500 for the month of December will be paid in early January 2022.
On November 1, 2021, the company borrowed $190,000 from a bank. The note requires principal and interest at 12% to be paid on April 30, 2022.
On December 1, 2021, the company received $6,000 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December, January, and February was credited to deferred rent revenue.
On December 1, 2021, the company received $6,000 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December, January, and February was credited to rent revenue rather than deferred rent revenue for $6,000 on December 1, 2021.

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.

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