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Problem 3-2B Preparing adjusting and subsequent
Natsu Company's annual accounting period ends on October 31. 2019. The following information concerns the
a. The Office Supplies account started the fiscal year with a S600 balance. During the fiscal year, the company purchased supplies for S4,570, which was added to the Office Supplies account. The supplies available at October 31, 2019, totaled S800. Page 120
b. An analysis of the company's insurance policies provided the following facts. The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Tear-end adjusting entries for Prepaid Insurance were properly recorded in all prior Escal years.)
Policy Date of Purchase Months of Coverage Cost
A...... April 1.201E 2A $6,000
B...... April 1.2019 36 7,200
C...... August 1.2019 12 1,320
Policy Date of Purchase Months of Coverage Cost
A...... April 1,2017 24 $14,400
B...... April 1,2013 36 12,960
C...... August 1.2019 12 2,400
C. The company has 15 employees, who earn atotal of SI, 960 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. 2019. 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 Eve full days on Monday, January 6, 2020.
d. The company purchased a building on January 1, 2019. It cost S960,000 and is expected to have a S45,000 salvage value at the end of its predicted 30-year life. Annual depreciation is S30.500.
S. Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at S3,000 per month, starting on November 1. 2019. The rent was paid on time on November 1. and the amount received was credited to the Rent Earned account. 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 15. The tenant has agreed not to fall behind again.
f. On November 1. the company rented space to another tenant for S2.800 per month. The tenant paid five months' rent in advance on that date. The payment was recorded with a credit to the Unearned Rent account.
Required
1. Use the information to prepare adjusting entries as ofDecember 31, 2019.
2. Prepare journal entries to record the first subsequent cash transaction in 2020 for parts c and e.
Araei Company's annual accounting period ends on December 31, 2019. The following information concerns the adjusting entries to be recorded as of that date. Entries can draw from the following partial chart of accounts: Cash; Rent Receivable; Office Supplies; Prepaid Insurance; Building; Accumulated Depreciation—Building: Salaries Payable: Unearned Rent; Rent Earned; Salaries Expense; Office Supplies Expense; Insurance Expense; and Depreciation Expense—Building.
a. The Office Supplies account started the year with a 54,000 balance. During 2019, the company purchased supplies for S13,400, which was added to the Office Supplies account. The inventory of supplies available at December 31. 2019, totaled S2,554.
b. An analysis of the company's insurance policies provided the following facts. The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years.)
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Chapter 3 Solutions
FUNDAMENTAL ACCT PRIN CONNECT ACCESS
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