Question

Grasshopper Lawn Service provides general lawn maintenance to customers. The company’s fiscal year-end is December 31. Information necessary to prepare the year-end adjusting entries appears below.

On October 1, 2021, Grasshopper lent $65,000 to another company. A note was signed with principal and 8% interest to be paid on September 30, 2022.

On November 1, 2021, the company paid its landlord $9,000 representing rent for the months of November through January. Prepaid Rent was debited for the entire amount.

On August 1, 2021, Grasshopper collected $13,500 in advance rent from another company that is renting a portion of Grasshopper’s building. The $13,500 represents one year’s rent, and the entire amount was credited to Deferred Revenue.

Depreciation for the year is $18,500.

Salaries for the year that had been earned by employees but not paid to them or recorded is $8,500.

Grasshopper began the year with $18,000 in its Supplies account. During the year $62,500 in supplies were purchased and debited to the Supplies account. At year-end,supplies costing $22,500 remain on hand. Required:

what are and prepare adjusting entries on December 31, 2021.

Answer 1

Adjusting entry

No	Account title and explanation	Debit	Credit
Dec 31	Interest receivable (65000*8%*3/12)	1300
	Interest revenue		1300
Dec 31	Rent expense (9000/3*2)	6000
	Prepaid rent		6000
Dec 31	Deferred revenue (13500/12*5)	5625
	rent revenue		5625
Dec 31	Depreciation expense	18500
	Accumulated depreciation		18500
Dec 31	Salaries expense	8500
	Salaries payable		8500
Dec 31	Supplies expense (18000+62500-22500)	58000
	Supplies		58000