Question

The following transactions occurred during December 31, 2021, for the Falwell Company. A three-year fire insurance...

The following transactions occurred during December 31, 2021, for the Falwell Company.

  1. A three-year fire insurance policy was purchased on July 1, 2021, for $15,480. The company debited insurance expense for the entire amount.
  2. Depreciation on equipment totaled $14,500 for the year.
  3. Employee salaries of $21,500 for the month of December will be paid in early January 2022.
  4. On November 1, 2021, the company borrowed $290,000 from a bank. The note requires principal and interest at 12% to be paid on April 30, 2022.
  5. On December 1, 2021, the company received $8,700 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December, January, and February was credited to deferred rent revenue.
  6. On December 1, 2021, the company received $8,700 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December, January, and February was credited to rent revenue rather than deferred rent revenue for $8,700 on December 1, 2021.


Prepare the necessary adjusting entries for each of the above situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
  

Homework Answers

Answer #1

Adjusting entries

No general Journal Debit Credit
1 Insurance expense (15480/36*6) 2580
Prepaid insurance 2580
2 Depreciation expense 14500
Accumulated depreciation-equipment 14500
3 Salaries expense 21500
Salaries payable 21500
4 Interest expense (290000*12%*2/12) 5800
Interest payable 5800
5 Deferred rent revenue (8700/3) 2900
Rent revenue 2900
6 Rent revenue (2900*2) 5800
Deferred rent revenue 5800
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