Umbrella Corn, a company located in Tacoma, Washington, started its operations three years ago. The company is known all over the world for its innovative and sustainability efforts. The company uses the calendar years as its fiscal year, and prepares its adjusting entries once at the end of each year. Below you are provided with information regarding the adjusting entries to be recorded as of December 31. a. The Office Supplies account started the year with a $4,200 balance. During the year, the company purchased supplies for $17,346, which was added to the Office Supplies account. The inventory of supplies available at December 31 totaled $3,696. b. The Prepaid Insurance account had a $28,824 debit balance at December 31 before adjusting for the costs of any expired coverage for the year. An analysis of prepaid insurance shows that $20,769 of unexpired insurance coverage remains at year- end. c. The company has 15 employees, who earn a total of $2,000 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 $660,000 and is expected to have a $45,000 salvage value at the end of its predicted 30-year life. Annual depreciation is $20,500.
Umbrella Corn, a company located in Tacoma, Washington, started its operations three years ago. The company is known all over the world for its innovative and sustainability efforts. The company uses the calendar years as its fiscal year, and prepares its adjusting entries once at the end of each year. Below you are provided with information regarding the adjusting entries to be recorded as of December 31. a. The Office Supplies account started the year with a $4,200 balance. During the year, the company purchased supplies for $17,346, which was added to the Office Supplies account. The inventory of supplies available at December 31 totaled $3,696. b. The Prepaid Insurance account had a $28,824 debit balance at December 31 before adjusting for the costs of any expired coverage for the year. An analysis of prepaid insurance shows that $20,769 of unexpired insurance coverage remains at year- end. c. The company has 15 employees, who earn a total of $2,000 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 $660,000 and is expected to have a $45,000 salvage value at the end of its predicted 30-year life. Annual depreciation is $20,500.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:UmbrellaCorn, a company located in Tacoma, Washington, started its operations three years ago. The company is known all over the
world for its innovative and sustainability efforts. The company uses the calendar years as its fiscal year, and prepares its adjusting
entries once at the end of each year. Below you are provided with information regarding the adjusting entries to be recorded as of
December 31.
a. The Office Supplies account started the year with a $4,200 balance. During the year, the company purchased supplies for
$17,346, which was added to the Office Supplies account. The inventory of supplies available at December 31 totaled $3,696.
b. The Prepaid Insurance account had a $28,824 debit balance at December 31 before adjusting for the costs of any expired
coverage for the year. An analysis of prepaid insurance shows that $20,769 of unexpired insurance coverage remains at year-
end.
c. The company has 15 employees, who earn a total of $2,000 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 $660,000 and is expected to have a $45,000 salvage
value at the end of its predicted 30-year life. Annual depreciation is $20,500.
e. Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at $2,300 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 $2,084 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.
Required:
1. Use the information to prepare adjusting entries as of December 31.
2. Prepare journal entries to record the first subsequent cash transaction in January of the next year for parts c and e.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Use the information to prepare adjusting entries as of December 31.
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Journal entry worksheet
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2
3
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The Office Supplies account started the year with a $4,200 balance. During the
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