Reconstructing Adjusting Entries
For each situation, reconstruct the adjusting entry that was made to arrive at the ending balance. Assume statements and adjusting entries are prepared only once each year.
|
1. |
Prepaid Insurance: |
|
|
Balance beginning of year |
$5,600 |
|
|
Balance end of year |
6,400 |
During the year, an additional business insurance policy was purchased. A 2–year premium of $2,500 was paid and charged to Prepaid Insurance.
|
2. |
Accumulated Depreciation: |
|
|
|
Balance beginning of year |
$85,200 |
|
|
Balance end of year |
88,700 |
During the year, a depreciable asset that cost $7,500 and had a carrying value of $1,600 was sold for $2,400.The disposal of the asset was recorded correctly.
|
3. |
Unearned Rent: |
|
|
|
Balance beginning of year |
$11,000 |
|
|
Balance end of year |
15,000 |
Warehouse quarterly rent received in advance is $18,000. During the year, equipment was rented to another company at an annual rent of $9,000. The quarterly rent payments were credited to Rent Revenue; the annual equipment rental was credited to Unearned Rent.
|
4. |
Salaries Payable: |
|
|
|
Balance beginning of year |
$42,860 |
|
|
Balance end of year |
34,760 |
Salaries are paid biweekly. All salary payments during the year were debited to Salaries Expense.