Chapter 3, Problem 7QS

To determine

Journal Entries:

Journal entries are the transactions of quantitative nature that are made in the books of accounts to record every transaction that happens in the business in the chronological order.

Accounting rules for journal entries:

• To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.
• To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

Prepaid insurance:

Prepaid insurance is the amount of insurance paid in advance which is unexpired.

Unexpired insurance:

Unexpired insurance is that part of insurance amount which is paid in advance and is not yet expired. It is classified as a prepaid insurance on assets side of the balance sheet.

Supplies:

Supplies are units to be used in the business operations. Hence, supplies on hand constitute the assets of the business which are not yet utilized and similarly supplies expense constitutes supplies utilized in the business.

a.

To prepare: journal entries: