Answer:
1. Dr Insurance expense7,250
Cr Prepaid insurance7,250
2. Dr Interest receivable 675
Cr Interest revenue 675
3. Dr Depreciation expense15,400
Cr Accumulated depreciation15,400
Explanation:
Preparation of Journal entry
1. Based on the information given we were told that the amount of $29,000 was been paid for a one year fire insurance policy which means that the Journal entry will be :
Dr Insurance expense7,250
Cr Prepaid insurance7,250
($29,000 × 3/12 = $7,250)
2. Based on the information given we were told the company gave advanced to its chief financial officer for the amount of $27,000 which as well include principal and interest at 5% which means that the Journal entry will be :
Dr Interest receivable 675
Cr Interest revenue 675
($27,000 × 5% × 6/12 = $675)
3. Based on the information given we were told that the Depreciation on the equipment is the amount of $15,400 per year which means that the Journal entry will be :
Dr Depreciation expense15,400
Cr Accumulated depreciation15,400
