Question

1. On October 1, 2021, Grasshopper lent $120,000 to another company. A note was signed with principal and 8% interest to be paid on September 30, 2022.
2. On November 1, 2021, the company paid its landlord $25,500 representing rent for the months of November through January. Prepaid Rent was debited for the entire amount.
3. On August 1, 2021, Grasshopper collected $30,000 in advance rent from another company that is renting a portion of Grasshopper’s building. The $30,000 represents one year’s rent, and the entire amount was credited to Deferred Revenue.
4. Depreciation for the year is $24,000.

Prepare the necessary adjusting entries on December 31, 2021.

1. Vacation pay for the year that had been earned by employees but not paid to them or recorded is $14,000. The company records vacation pay as Salaries Expense.
2. Grasshopper began the year with $29,000 in its Supplies account. During the year $68,000 in supplies were purchased and debited to the Supplies account. At year-end,supplies costing $28,000 remain on hand.

Answer 1

Adjusting entries

No	General Journal	Debit	Credit
1	Interest receivable (120000*8%*3/12)	2400
	Interest revenue		2400
2	Rent expense (25500/3*2)	17000
	Prepaid rent		17000
3	Deferred revenue (30000/12*5)	12500
	Rent revenue		12500
4	Depreciation expense	24000
	Accumulated depreciation		24000

Adjusting entry

No	General Journal	Debit	Credit
1	Salaries expense	14000
	Salaries payable		14000
2	Supplies expense (29000+68000-28000)	69000
	Supplies		69000