Adjusted Journal Entries: Adjustment entries are just like the journal entries and are basic for accounting. They are made in the closing period to adjust the expenses and incomes in the period in which they occurred. To show the true and fair financial position, it is essential to pass the adjustment entries. This includes the adjustments for the accrued interest, unearned revenues and the prepaid expenses. They can be termed as the closing entries as well from the accounting perspective. To Prepare: Adjusted journal Entries as of 31 st December, 2017

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 2APSA

To determine

Concept Introduction:

Adjusted Journal Entries: Adjustment entries are just like the journal entries and are basic for accounting. They are made in the closing period to adjust the expenses and incomes in the period in which they occurred. To show the true and fair financial position, it is essential to pass the adjustment entries. This includes the adjustments for the accrued interest, unearned revenues and the prepaid expenses. They can be termed as the closing entries as well from the accounting perspective.

To Prepare:

Adjusted journal Entries as of 31^st December, 2017

Expert Solution & Answer

Explanation of Solution

Given: Opening balance of office supplies is $4,000

Purchased during the year is $13,400

Closing balance of office supplies is $2,554

$\begin{array}{l} O f f i c e S u p p l i e s E x p e n s e = O p e n i n g b a l a n c e o f o f f i c e s u p p l i e s + O f f i c e s u p p l i e s p u r c h a s e d d u r i n g t h e y e a r \\ - C l o s i n g b a l a n c e o f o f f i c e s u p p l i e s \\ = $ 4, 000 + $ 13, 400 - $ 2, 554 \\ = $ 14, 846 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Office supplies Expense	$14,846
To Office Supplies		$14,846

It reflects that the office supplies, an asset of the company, used during the year amounts to $14,846. Due to this, asset (office supplies) is decreased by 14,846 and it simultaneously hits the profit and loss account as expense by the same amount in the form of office supplies expense.

Calculation of insurance expense out of prepaid insurance as of 31^st December,, 2017

$\begin{array}{l} Insurance expensed out during the year = Pepaid insurance/Months of coverage \\ × Months coverage in the current year \\ P o l i c y A \\ = $ 14, 400 / 24 \times 3 \\ = $ 1, 800 \\ P o l i c y B \\ = $ 12, 960 / 36 \times 12 \\ = $ 4, 320 \\ P o l i c y C \\ = $ 2, 400 / 12 \times 5 \\ = $ 1, 000 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Insurance Expense	$7,120
To Prepaid Insurance		$7,120

It reflects that out of the prepaid insurance, Arnez Company expensed out $7,120 as insurance expense. Due to this transaction, the Company’s asset (prepaid Insurance) was decreased by $7,120 and simultaneously it hits the profit and loss account on the expense side by the same amount as insurance expense.

Calculation of employee’s salaries to be paid on Monday, 6^th January, 2018.

$\begin{array}{l} E m p l o y e e' s s a l a r i e s t o b e p a i d = S a l a r i e s p e r d a y \times N o o f w o r k i n g d a y s i n a w e e k \\ = $ 1, 960 \times 5 \\ = $ 9, 800 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Salaries Expense	$9,800
To Salaries Payable		$9,800

Due to this transaction, Company’s liabilities in the form of salaries payable has increased by $9,800 as it will be payable on 6^th January, 2018 i.e., after the end of the financial year and simultaneously it hits the profit and loss account of the financial year ending 31^st December, 2017 as salaries expense by $9,800.

Calculation of annual depreciation on building.

$\begin{array}{l} A n n u a l d e p r e c i a t i o n o n b u i l d i n g = (C o s t p r i c e o f b u i l d i n g - S a l v a g e V a l u e) \\ / E x p e c t e d U s e f u l l i f e \\ = ($ 960, 000 - $ 45, 000) / 30 \\ = $ 30, 500 \end{array}$

Journal entry should be:

Particulars	Debits	Credits
Depreciation Expense-Building	$9,800
To Accumulated Depreciation-Building		$9,800

The effect of this transaction reflects that the value of building is depreciated by $30,500 and charged to profit and loss account as depreciation expense on building.

Journal Entry of tenant falling to pay rent of December month on time

Particulars	Debits	Credits
Rent receivable	$3,000
To Rent Earned		$3,000

The effect of this transaction is that the asset (Rent Receivable) is created by the $3,000 and it appears in the Balance Sheet on the asset side and shows recovery to be made from tenant and simultaneously, income side of profit and loss account is increased by the same amount.

Journal Entry of five month's rent received in advance.

Particulars	Debits	Credits
Cash	$14,000
To Unearned Rent		$14,000

The effect of above transaction is that the unearned rent should be shown on the liabilities side of the Balance Sheet which reflects the services to be provided to the tenant against the rent received and simultaneously, company’s assets are increased by the same amount.

Pass journal entries to record the first subsequent cash transactions in 2018 for parts c and e.

S. No.	Date	Particulars	Debits	Credits
c	06^th January, 2018	Salaries Payable	$9,800
		To Cash		$9,800
e	15^th January, 2018	Cash	$3,000
		To rent Receivable		$3,000

Hence, the journal entries of cash transactions in 2018 are prepared.

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Students have asked these similar questions

Fairfield Company's payroll costs for the most recent month are summarized here: Item Hourly labor unges Description 920 hours $27 per hour 190 hours for Job 101 340 hours for Job 102 Factory supervision Production engineer Factory Janitorial work Selling, general, and administrative salaries Total payroll costs Required: 390 hours for Job 103 Total Cost $ 5,130 9,180 10,530 $ 24,840 4,350 7,100 1,200 8,800 $ 46,298 1. & 2. Prepare the journal entries for payroll and to apply manufacturing overhead to production. The company applies manufacturing overhead to products at a predetermined rate of $54 per direct labor hour Note: If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. View transaction list Journal entry worksheet A B Record Fairfield Company's payroll costs to be paid at a later date. Note Enter debits before credits. S.No Date 1 Account Title Debit Credit

No wrong answer

L.L. Bean operates two factories that produce its popular Bean boots (also known as "duck boots") in its home state of Maine. Since L.L. Bean prides itself on manufacturing its boots in Maine and not outsourcing, backorders for its boots can be high. In 2014, L.L. Bean sold about 450,000 pairs of the boots. At one point during 2014, it had a backorder level of about 100,000 pairs of boots. L.L. Bean can manufacture about 2,200 pairs of its duck boots each day with its factories running 24/7. In 2015, L.L. Bean expects to sell more than 500,000 pairs of its duck boots. As of late November 2015, the backorder quantity for Bean Boots was estimated to be about 50,000 pairs. Question: Now assume that 5% of the L.L. Bean boots are returned by customers for various reasons. L. Bean has a 100% refund policy for returns, no matter what the reason. What would the journal entry be to accrue L.L. Bean's sales returns for this one pair of boots?

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 2APSA

To determine

Concept Introduction:

Adjusted Journal Entries: Adjustment entries are just like the journal entries and are basic for accounting. They are made in the closing period to adjust the expenses and incomes in the period in which they occurred. To show the true and fair financial position, it is essential to pass the adjustment entries. This includes the adjustments for the accrued interest, unearned revenues and the prepaid expenses. They can be termed as the closing entries as well from the accounting perspective.

To Prepare:

Adjusted journal Entries as of 31^st December, 2017

Expert Solution & Answer

Explanation of Solution

Given: Opening balance of office supplies is $4,000

Purchased during the year is $13,400

Closing balance of office supplies is $2,554

$\begin{array}{l} O f f i c e S u p p l i e s E x p e n s e = O p e n i n g b a l a n c e o f o f f i c e s u p p l i e s + O f f i c e s u p p l i e s p u r c h a s e d d u r i n g t h e y e a r \\ - C l o s i n g b a l a n c e o f o f f i c e s u p p l i e s \\ = $ 4, 000 + $ 13, 400 - $ 2, 554 \\ = $ 14, 846 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Office supplies Expense	$14,846
To Office Supplies		$14,846

It reflects that the office supplies, an asset of the company, used during the year amounts to $14,846. Due to this, asset (office supplies) is decreased by 14,846 and it simultaneously hits the profit and loss account as expense by the same amount in the form of office supplies expense.

Calculation of insurance expense out of prepaid insurance as of 31^st December,, 2017

$\begin{array}{l} Insurance expensed out during the year = Pepaid insurance/Months of coverage \\ × Months coverage in the current year \\ P o l i c y A \\ = $ 14, 400 / 24 \times 3 \\ = $ 1, 800 \\ P o l i c y B \\ = $ 12, 960 / 36 \times 12 \\ = $ 4, 320 \\ P o l i c y C \\ = $ 2, 400 / 12 \times 5 \\ = $ 1, 000 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Insurance Expense	$7,120
To Prepaid Insurance		$7,120

It reflects that out of the prepaid insurance, Arnez Company expensed out $7,120 as insurance expense. Due to this transaction, the Company’s asset (prepaid Insurance) was decreased by $7,120 and simultaneously it hits the profit and loss account on the expense side by the same amount as insurance expense.

Calculation of employee’s salaries to be paid on Monday, 6^th January, 2018.

$\begin{array}{l} E m p l o y e e' s s a l a r i e s t o b e p a i d = S a l a r i e s p e r d a y \times N o o f w o r k i n g d a y s i n a w e e k \\ = $ 1, 960 \times 5 \\ = $ 9, 800 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Salaries Expense	$9,800
To Salaries Payable		$9,800

Due to this transaction, Company’s liabilities in the form of salaries payable has increased by $9,800 as it will be payable on 6^th January, 2018 i.e., after the end of the financial year and simultaneously it hits the profit and loss account of the financial year ending 31^st December, 2017 as salaries expense by $9,800.

Calculation of annual depreciation on building.

$\begin{array}{l} A n n u a l d e p r e c i a t i o n o n b u i l d i n g = (C o s t p r i c e o f b u i l d i n g - S a l v a g e V a l u e) \\ / E x p e c t e d U s e f u l l i f e \\ = ($ 960, 000 - $ 45, 000) / 30 \\ = $ 30, 500 \end{array}$

Journal entry should be:

Particulars	Debits	Credits
Depreciation Expense-Building	$9,800
To Accumulated Depreciation-Building		$9,800

The effect of this transaction reflects that the value of building is depreciated by $30,500 and charged to profit and loss account as depreciation expense on building.

Journal Entry of tenant falling to pay rent of December month on time

Particulars	Debits	Credits
Rent receivable	$3,000
To Rent Earned		$3,000

The effect of this transaction is that the asset (Rent Receivable) is created by the $3,000 and it appears in the Balance Sheet on the asset side and shows recovery to be made from tenant and simultaneously, income side of profit and loss account is increased by the same amount.

Journal Entry of five month's rent received in advance.

Particulars	Debits	Credits
Cash	$14,000
To Unearned Rent		$14,000

The effect of above transaction is that the unearned rent should be shown on the liabilities side of the Balance Sheet which reflects the services to be provided to the tenant against the rent received and simultaneously, company’s assets are increased by the same amount.

Pass journal entries to record the first subsequent cash transactions in 2018 for parts c and e.

S. No.	Date	Particulars	Debits	Credits
c	06^th January, 2018	Salaries Payable	$9,800
		To Cash		$9,800
e	15^th January, 2018	Cash	$3,000
		To rent Receivable		$3,000

Hence, the journal entries of cash transactions in 2018 are prepared.

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 2APSA

To determine

Concept Introduction:

Adjusted Journal Entries: Adjustment entries are just like the journal entries and are basic for accounting. They are made in the closing period to adjust the expenses and incomes in the period in which they occurred. To show the true and fair financial position, it is essential to pass the adjustment entries. This includes the adjustments for the accrued interest, unearned revenues and the prepaid expenses. They can be termed as the closing entries as well from the accounting perspective.

To Prepare:

Adjusted journal Entries as of 31^st December, 2017

Expert Solution & Answer

Explanation of Solution

Given: Opening balance of office supplies is $4,000

Purchased during the year is $13,400

Closing balance of office supplies is $2,554

$\begin{array}{l} O f f i c e S u p p l i e s E x p e n s e = O p e n i n g b a l a n c e o f o f f i c e s u p p l i e s + O f f i c e s u p p l i e s p u r c h a s e d d u r i n g t h e y e a r \\ - C l o s i n g b a l a n c e o f o f f i c e s u p p l i e s \\ = $ 4, 000 + $ 13, 400 - $ 2, 554 \\ = $ 14, 846 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Office supplies Expense	$14,846
To Office Supplies		$14,846

It reflects that the office supplies, an asset of the company, used during the year amounts to $14,846. Due to this, asset (office supplies) is decreased by 14,846 and it simultaneously hits the profit and loss account as expense by the same amount in the form of office supplies expense.

Calculation of insurance expense out of prepaid insurance as of 31^st December,, 2017

$\begin{array}{l} Insurance expensed out during the year = Pepaid insurance/Months of coverage \\ × Months coverage in the current year \\ P o l i c y A \\ = $ 14, 400 / 24 \times 3 \\ = $ 1, 800 \\ P o l i c y B \\ = $ 12, 960 / 36 \times 12 \\ = $ 4, 320 \\ P o l i c y C \\ = $ 2, 400 / 12 \times 5 \\ = $ 1, 000 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Insurance Expense	$7,120
To Prepaid Insurance		$7,120

It reflects that out of the prepaid insurance, Arnez Company expensed out $7,120 as insurance expense. Due to this transaction, the Company’s asset (prepaid Insurance) was decreased by $7,120 and simultaneously it hits the profit and loss account on the expense side by the same amount as insurance expense.

Calculation of employee’s salaries to be paid on Monday, 6^th January, 2018.

$\begin{array}{l} E m p l o y e e' s s a l a r i e s t o b e p a i d = S a l a r i e s p e r d a y \times N o o f w o r k i n g d a y s i n a w e e k \\ = $ 1, 960 \times 5 \\ = $ 9, 800 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Salaries Expense	$9,800
To Salaries Payable		$9,800

Due to this transaction, Company’s liabilities in the form of salaries payable has increased by $9,800 as it will be payable on 6^th January, 2018 i.e., after the end of the financial year and simultaneously it hits the profit and loss account of the financial year ending 31^st December, 2017 as salaries expense by $9,800.

Calculation of annual depreciation on building.

$\begin{array}{l} A n n u a l d e p r e c i a t i o n o n b u i l d i n g = (C o s t p r i c e o f b u i l d i n g - S a l v a g e V a l u e) \\ / E x p e c t e d U s e f u l l i f e \\ = ($ 960, 000 - $ 45, 000) / 30 \\ = $ 30, 500 \end{array}$

Journal entry should be:

Particulars	Debits	Credits
Depreciation Expense-Building	$9,800
To Accumulated Depreciation-Building		$9,800

The effect of this transaction reflects that the value of building is depreciated by $30,500 and charged to profit and loss account as depreciation expense on building.

Journal Entry of tenant falling to pay rent of December month on time

Particulars	Debits	Credits
Rent receivable	$3,000
To Rent Earned		$3,000

The effect of this transaction is that the asset (Rent Receivable) is created by the $3,000 and it appears in the Balance Sheet on the asset side and shows recovery to be made from tenant and simultaneously, income side of profit and loss account is increased by the same amount.

Journal Entry of five month's rent received in advance.

Particulars	Debits	Credits
Cash	$14,000
To Unearned Rent		$14,000

The effect of above transaction is that the unearned rent should be shown on the liabilities side of the Balance Sheet which reflects the services to be provided to the tenant against the rent received and simultaneously, company’s assets are increased by the same amount.

Pass journal entries to record the first subsequent cash transactions in 2018 for parts c and e.

S. No.	Date	Particulars	Debits	Credits
c	06^th January, 2018	Salaries Payable	$9,800
		To Cash		$9,800
e	15^th January, 2018	Cash	$3,000
		To rent Receivable		$3,000

Hence, the journal entries of cash transactions in 2018 are prepared.

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 2APSA

To determine

Concept Introduction:

Adjusted Journal Entries: Adjustment entries are just like the journal entries and are basic for accounting. They are made in the closing period to adjust the expenses and incomes in the period in which they occurred. To show the true and fair financial position, it is essential to pass the adjustment entries. This includes the adjustments for the accrued interest, unearned revenues and the prepaid expenses. They can be termed as the closing entries as well from the accounting perspective.

To Prepare:

Adjusted journal Entries as of 31^st December, 2017

Expert Solution & Answer

Explanation of Solution

Given: Opening balance of office supplies is $4,000

Purchased during the year is $13,400

Closing balance of office supplies is $2,554

$\begin{array}{l} O f f i c e S u p p l i e s E x p e n s e = O p e n i n g b a l a n c e o f o f f i c e s u p p l i e s + O f f i c e s u p p l i e s p u r c h a s e d d u r i n g t h e y e a r \\ - C l o s i n g b a l a n c e o f o f f i c e s u p p l i e s \\ = $ 4, 000 + $ 13, 400 - $ 2, 554 \\ = $ 14, 846 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Office supplies Expense	$14,846
To Office Supplies		$14,846

It reflects that the office supplies, an asset of the company, used during the year amounts to $14,846. Due to this, asset (office supplies) is decreased by 14,846 and it simultaneously hits the profit and loss account as expense by the same amount in the form of office supplies expense.

Calculation of insurance expense out of prepaid insurance as of 31^st December,, 2017

$\begin{array}{l} Insurance expensed out during the year = Pepaid insurance/Months of coverage \\ × Months coverage in the current year \\ P o l i c y A \\ = $ 14, 400 / 24 \times 3 \\ = $ 1, 800 \\ P o l i c y B \\ = $ 12, 960 / 36 \times 12 \\ = $ 4, 320 \\ P o l i c y C \\ = $ 2, 400 / 12 \times 5 \\ = $ 1, 000 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Insurance Expense	$7,120
To Prepaid Insurance		$7,120

It reflects that out of the prepaid insurance, Arnez Company expensed out $7,120 as insurance expense. Due to this transaction, the Company’s asset (prepaid Insurance) was decreased by $7,120 and simultaneously it hits the profit and loss account on the expense side by the same amount as insurance expense.

Calculation of employee’s salaries to be paid on Monday, 6^th January, 2018.

$\begin{array}{l} E m p l o y e e' s s a l a r i e s t o b e p a i d = S a l a r i e s p e r d a y \times N o o f w o r k i n g d a y s i n a w e e k \\ = $ 1, 960 \times 5 \\ = $ 9, 800 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Salaries Expense	$9,800
To Salaries Payable		$9,800

Due to this transaction, Company’s liabilities in the form of salaries payable has increased by $9,800 as it will be payable on 6^th January, 2018 i.e., after the end of the financial year and simultaneously it hits the profit and loss account of the financial year ending 31^st December, 2017 as salaries expense by $9,800.

Calculation of annual depreciation on building.

$\begin{array}{l} A n n u a l d e p r e c i a t i o n o n b u i l d i n g = (C o s t p r i c e o f b u i l d i n g - S a l v a g e V a l u e) \\ / E x p e c t e d U s e f u l l i f e \\ = ($ 960, 000 - $ 45, 000) / 30 \\ = $ 30, 500 \end{array}$

Journal entry should be:

Particulars	Debits	Credits
Depreciation Expense-Building	$9,800
To Accumulated Depreciation-Building		$9,800

The effect of this transaction reflects that the value of building is depreciated by $30,500 and charged to profit and loss account as depreciation expense on building.

Journal Entry of tenant falling to pay rent of December month on time

Particulars	Debits	Credits
Rent receivable	$3,000
To Rent Earned		$3,000

The effect of this transaction is that the asset (Rent Receivable) is created by the $3,000 and it appears in the Balance Sheet on the asset side and shows recovery to be made from tenant and simultaneously, income side of profit and loss account is increased by the same amount.

Journal Entry of five month's rent received in advance.

Particulars	Debits	Credits
Cash	$14,000
To Unearned Rent		$14,000

The effect of above transaction is that the unearned rent should be shown on the liabilities side of the Balance Sheet which reflects the services to be provided to the tenant against the rent received and simultaneously, company’s assets are increased by the same amount.

Pass journal entries to record the first subsequent cash transactions in 2018 for parts c and e.

S. No.	Date	Particulars	Debits	Credits
c	06^th January, 2018	Salaries Payable	$9,800
		To Cash		$9,800
e	15^th January, 2018	Cash	$3,000
		To rent Receivable		$3,000

Hence, the journal entries of cash transactions in 2018 are prepared.

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Answer 5

Chapter 3, Problem 2APSA

To determine

Concept Introduction:

Adjusted Journal Entries: Adjustment entries are just like the journal entries and are basic for accounting. They are made in the closing period to adjust the expenses and incomes in the period in which they occurred. To show the true and fair financial position, it is essential to pass the adjustment entries. This includes the adjustments for the accrued interest, unearned revenues and the prepaid expenses. They can be termed as the closing entries as well from the accounting perspective.

To Prepare:

Adjusted journal Entries as of 31^st December, 2017

Expert Solution & Answer

Explanation of Solution

Given: Opening balance of office supplies is $4,000

Purchased during the year is $13,400

Closing balance of office supplies is $2,554

$\begin{array}{l} O f f i c e S u p p l i e s E x p e n s e = O p e n i n g b a l a n c e o f o f f i c e s u p p l i e s + O f f i c e s u p p l i e s p u r c h a s e d d u r i n g t h e y e a r \\ - C l o s i n g b a l a n c e o f o f f i c e s u p p l i e s \\ = $ 4, 000 + $ 13, 400 - $ 2, 554 \\ = $ 14, 846 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Office supplies Expense	$14,846
To Office Supplies		$14,846

It reflects that the office supplies, an asset of the company, used during the year amounts to $14,846. Due to this, asset (office supplies) is decreased by 14,846 and it simultaneously hits the profit and loss account as expense by the same amount in the form of office supplies expense.

Calculation of insurance expense out of prepaid insurance as of 31^st December,, 2017

$\begin{array}{l} Insurance expensed out during the year = Pepaid insurance/Months of coverage \\ × Months coverage in the current year \\ P o l i c y A \\ = $ 14, 400 / 24 \times 3 \\ = $ 1, 800 \\ P o l i c y B \\ = $ 12, 960 / 36 \times 12 \\ = $ 4, 320 \\ P o l i c y C \\ = $ 2, 400 / 12 \times 5 \\ = $ 1, 000 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Insurance Expense	$7,120
To Prepaid Insurance		$7,120

It reflects that out of the prepaid insurance, Arnez Company expensed out $7,120 as insurance expense. Due to this transaction, the Company’s asset (prepaid Insurance) was decreased by $7,120 and simultaneously it hits the profit and loss account on the expense side by the same amount as insurance expense.

Calculation of employee’s salaries to be paid on Monday, 6^th January, 2018.

$\begin{array}{l} E m p l o y e e' s s a l a r i e s t o b e p a i d = S a l a r i e s p e r d a y \times N o o f w o r k i n g d a y s i n a w e e k \\ = $ 1, 960 \times 5 \\ = $ 9, 800 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Salaries Expense	$9,800
To Salaries Payable		$9,800

Due to this transaction, Company’s liabilities in the form of salaries payable has increased by $9,800 as it will be payable on 6^th January, 2018 i.e., after the end of the financial year and simultaneously it hits the profit and loss account of the financial year ending 31^st December, 2017 as salaries expense by $9,800.

Calculation of annual depreciation on building.

$\begin{array}{l} A n n u a l d e p r e c i a t i o n o n b u i l d i n g = (C o s t p r i c e o f b u i l d i n g - S a l v a g e V a l u e) \\ / E x p e c t e d U s e f u l l i f e \\ = ($ 960, 000 - $ 45, 000) / 30 \\ = $ 30, 500 \end{array}$

Journal entry should be:

Particulars	Debits	Credits
Depreciation Expense-Building	$9,800
To Accumulated Depreciation-Building		$9,800

The effect of this transaction reflects that the value of building is depreciated by $30,500 and charged to profit and loss account as depreciation expense on building.

Journal Entry of tenant falling to pay rent of December month on time

Particulars	Debits	Credits
Rent receivable	$3,000
To Rent Earned		$3,000

The effect of this transaction is that the asset (Rent Receivable) is created by the $3,000 and it appears in the Balance Sheet on the asset side and shows recovery to be made from tenant and simultaneously, income side of profit and loss account is increased by the same amount.

Journal Entry of five month's rent received in advance.

Particulars	Debits	Credits
Cash	$14,000
To Unearned Rent		$14,000

The effect of above transaction is that the unearned rent should be shown on the liabilities side of the Balance Sheet which reflects the services to be provided to the tenant against the rent received and simultaneously, company’s assets are increased by the same amount.

Pass journal entries to record the first subsequent cash transactions in 2018 for parts c and e.

S. No.	Date	Particulars	Debits	Credits
c	06^th January, 2018	Salaries Payable	$9,800
		To Cash		$9,800
e	15^th January, 2018	Cash	$3,000
		To rent Receivable		$3,000

Hence, the journal entries of cash transactions in 2018 are prepared.

Answer 6

Chapter 3, Problem 2APSA

To determine

Concept Introduction:

Adjusted Journal Entries: Adjustment entries are just like the journal entries and are basic for accounting. They are made in the closing period to adjust the expenses and incomes in the period in which they occurred. To show the true and fair financial position, it is essential to pass the adjustment entries. This includes the adjustments for the accrued interest, unearned revenues and the prepaid expenses. They can be termed as the closing entries as well from the accounting perspective.

To Prepare:

Adjusted journal Entries as of 31^st December, 2017

Expert Solution & Answer

Explanation of Solution

Given: Opening balance of office supplies is $4,000

Purchased during the year is $13,400

Closing balance of office supplies is $2,554

$\begin{array}{l} O f f i c e S u p p l i e s E x p e n s e = O p e n i n g b a l a n c e o f o f f i c e s u p p l i e s + O f f i c e s u p p l i e s p u r c h a s e d d u r i n g t h e y e a r \\ - C l o s i n g b a l a n c e o f o f f i c e s u p p l i e s \\ = $ 4, 000 + $ 13, 400 - $ 2, 554 \\ = $ 14, 846 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Office supplies Expense	$14,846
To Office Supplies		$14,846

It reflects that the office supplies, an asset of the company, used during the year amounts to $14,846. Due to this, asset (office supplies) is decreased by 14,846 and it simultaneously hits the profit and loss account as expense by the same amount in the form of office supplies expense.

Calculation of insurance expense out of prepaid insurance as of 31^st December,, 2017

$\begin{array}{l} Insurance expensed out during the year = Pepaid insurance/Months of coverage \\ × Months coverage in the current year \\ P o l i c y A \\ = $ 14, 400 / 24 \times 3 \\ = $ 1, 800 \\ P o l i c y B \\ = $ 12, 960 / 36 \times 12 \\ = $ 4, 320 \\ P o l i c y C \\ = $ 2, 400 / 12 \times 5 \\ = $ 1, 000 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Insurance Expense	$7,120
To Prepaid Insurance		$7,120

It reflects that out of the prepaid insurance, Arnez Company expensed out $7,120 as insurance expense. Due to this transaction, the Company’s asset (prepaid Insurance) was decreased by $7,120 and simultaneously it hits the profit and loss account on the expense side by the same amount as insurance expense.

Calculation of employee’s salaries to be paid on Monday, 6^th January, 2018.

$\begin{array}{l} E m p l o y e e' s s a l a r i e s t o b e p a i d = S a l a r i e s p e r d a y \times N o o f w o r k i n g d a y s i n a w e e k \\ = $ 1, 960 \times 5 \\ = $ 9, 800 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Salaries Expense	$9,800
To Salaries Payable		$9,800

Due to this transaction, Company’s liabilities in the form of salaries payable has increased by $9,800 as it will be payable on 6^th January, 2018 i.e., after the end of the financial year and simultaneously it hits the profit and loss account of the financial year ending 31^st December, 2017 as salaries expense by $9,800.

Calculation of annual depreciation on building.

$\begin{array}{l} A n n u a l d e p r e c i a t i o n o n b u i l d i n g = (C o s t p r i c e o f b u i l d i n g - S a l v a g e V a l u e) \\ / E x p e c t e d U s e f u l l i f e \\ = ($ 960, 000 - $ 45, 000) / 30 \\ = $ 30, 500 \end{array}$

Journal entry should be:

Particulars	Debits	Credits
Depreciation Expense-Building	$9,800
To Accumulated Depreciation-Building		$9,800

The effect of this transaction reflects that the value of building is depreciated by $30,500 and charged to profit and loss account as depreciation expense on building.

Journal Entry of tenant falling to pay rent of December month on time

Particulars	Debits	Credits
Rent receivable	$3,000
To Rent Earned		$3,000

The effect of this transaction is that the asset (Rent Receivable) is created by the $3,000 and it appears in the Balance Sheet on the asset side and shows recovery to be made from tenant and simultaneously, income side of profit and loss account is increased by the same amount.

Journal Entry of five month's rent received in advance.

Particulars	Debits	Credits
Cash	$14,000
To Unearned Rent		$14,000

The effect of above transaction is that the unearned rent should be shown on the liabilities side of the Balance Sheet which reflects the services to be provided to the tenant against the rent received and simultaneously, company’s assets are increased by the same amount.

Pass journal entries to record the first subsequent cash transactions in 2018 for parts c and e.

S. No.	Date	Particulars	Debits	Credits
c	06^th January, 2018	Salaries Payable	$9,800
		To Cash		$9,800
e	15^th January, 2018	Cash	$3,000
		To rent Receivable		$3,000

Hence, the journal entries of cash transactions in 2018 are prepared.

Answer 7

Chapter 3, Problem 2APSA

To determine

Concept Introduction:

Adjusted Journal Entries: Adjustment entries are just like the journal entries and are basic for accounting. They are made in the closing period to adjust the expenses and incomes in the period in which they occurred. To show the true and fair financial position, it is essential to pass the adjustment entries. This includes the adjustments for the accrued interest, unearned revenues and the prepaid expenses. They can be termed as the closing entries as well from the accounting perspective.

To Prepare:

Adjusted journal Entries as of 31^st December, 2017

Answer 8

Expert Solution & Answer

Explanation of Solution

Given: Opening balance of office supplies is $4,000

Purchased during the year is $13,400

Closing balance of office supplies is $2,554

$\begin{array}{l} O f f i c e S u p p l i e s E x p e n s e = O p e n i n g b a l a n c e o f o f f i c e s u p p l i e s + O f f i c e s u p p l i e s p u r c h a s e d d u r i n g t h e y e a r \\ - C l o s i n g b a l a n c e o f o f f i c e s u p p l i e s \\ = $ 4, 000 + $ 13, 400 - $ 2, 554 \\ = $ 14, 846 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Office supplies Expense	$14,846
To Office Supplies		$14,846

It reflects that the office supplies, an asset of the company, used during the year amounts to $14,846. Due to this, asset (office supplies) is decreased by 14,846 and it simultaneously hits the profit and loss account as expense by the same amount in the form of office supplies expense.

Calculation of insurance expense out of prepaid insurance as of 31^st December,, 2017

$\begin{array}{l} Insurance expensed out during the year = Pepaid insurance/Months of coverage \\ × Months coverage in the current year \\ P o l i c y A \\ = $ 14, 400 / 24 \times 3 \\ = $ 1, 800 \\ P o l i c y B \\ = $ 12, 960 / 36 \times 12 \\ = $ 4, 320 \\ P o l i c y C \\ = $ 2, 400 / 12 \times 5 \\ = $ 1, 000 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Insurance Expense	$7,120
To Prepaid Insurance		$7,120

It reflects that out of the prepaid insurance, Arnez Company expensed out $7,120 as insurance expense. Due to this transaction, the Company’s asset (prepaid Insurance) was decreased by $7,120 and simultaneously it hits the profit and loss account on the expense side by the same amount as insurance expense.

Calculation of employee’s salaries to be paid on Monday, 6^th January, 2018.

$\begin{array}{l} E m p l o y e e' s s a l a r i e s t o b e p a i d = S a l a r i e s p e r d a y \times N o o f w o r k i n g d a y s i n a w e e k \\ = $ 1, 960 \times 5 \\ = $ 9, 800 \end{array}$

Journal Entry should be:

Particulars	Debits	Credits
Salaries Expense	$9,800
To Salaries Payable		$9,800

Due to this transaction, Company’s liabilities in the form of salaries payable has increased by $9,800 as it will be payable on 6^th January, 2018 i.e., after the end of the financial year and simultaneously it hits the profit and loss account of the financial year ending 31^st December, 2017 as salaries expense by $9,800.

Calculation of annual depreciation on building.

$\begin{array}{l} A n n u a l d e p r e c i a t i o n o n b u i l d i n g = (C o s t p r i c e o f b u i l d i n g - S a l v a g e V a l u e) \\ / E x p e c t e d U s e f u l l i f e \\ = ($ 960, 000 - $ 45, 000) / 30 \\ = $ 30, 500 \end{array}$

Journal entry should be:

Particulars	Debits	Credits
Depreciation Expense-Building	$9,800
To Accumulated Depreciation-Building		$9,800

The effect of this transaction reflects that the value of building is depreciated by $30,500 and charged to profit and loss account as depreciation expense on building.

Journal Entry of tenant falling to pay rent of December month on time

Particulars	Debits	Credits
Rent receivable	$3,000
To Rent Earned		$3,000

The effect of this transaction is that the asset (Rent Receivable) is created by the $3,000 and it appears in the Balance Sheet on the asset side and shows recovery to be made from tenant and simultaneously, income side of profit and loss account is increased by the same amount.

Journal Entry of five month's rent received in advance.

Particulars	Debits	Credits
Cash	$14,000
To Unearned Rent		$14,000

The effect of above transaction is that the unearned rent should be shown on the liabilities side of the Balance Sheet which reflects the services to be provided to the tenant against the rent received and simultaneously, company’s assets are increased by the same amount.

Pass journal entries to record the first subsequent cash transactions in 2018 for parts c and e.

S. No.	Date	Particulars	Debits	Credits
c	06^th January, 2018	Salaries Payable	$9,800
		To Cash		$9,800
e	15^th January, 2018	Cash	$3,000
		To rent Receivable		$3,000