Question

Below are transactions for Wolverine Company during 2021.On December 1, 2021, Wolverine receives $2,400 cash from a company that is renting office space from Wolverine. The payment, representing rent for December and January, is credited to Deferred Revenue.Wolverine purchases a one-year property insurance policy on July 1, 2021, for $11,280. The payment is debited to Prepaid Insurance for the entire amount.Employee salaries of $1,400 for the month of December will be paid in early January 2022.On November 1, 2021, the company borrows $7,000 from a bank. The loan requires principal and interest at 12% to be paid on October 30, 2022.Office supplies at the beginning of 2021 total $840. On August 15, Wolverine purchases an additional $1,800 of office supplies, debiting the Supplies account. By the end of the year, $340 of office supplies remains.Required:Record the necessary adjusting entries at December 31, 2021, for Wolverine Company. You do not need to record transactions made during the year. 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. Do not round intermediate calculations.)

Answer 1

Answer:

1. Dr    Cash    2400

     Cr       Deferred revenue   2400

 (To record advance received for office space,which is not earned yet)

2.a)Dr Prepaid insurance  11280

              Cr Cash                   11280

( To record purchase of insurance )

  b)  Dr  Insurance expense 5640

                     Cr prepaid insurance     5640

      ( To record insurance expired)

3. Dr salary expense       1400

        Cr  Salary payable          1400

( To record salary expense for the m/o December)

4. Dr Cash    7000

         Cr   Loan payable      7000

       ( Acquire loan from bank)

5. a) Dr Interest expense  1680

              Cr interest payable          1680

  ( To record interest expense of 2 months )    

6. a)Dr supplies  1800

         Cr       Cash             1800

         (Supplies purchased)

   b) Dr Supplies expense   1460

              Cr     Supplies                   1460

   (Adjusting entry of supplies used)

Explanation:

2. Insurance for the month = 11280/12= 940. For 6 months= 940*6=5640

4. yearly interest rate = 7000 *12% = 840. two month interest = 840 *2= 1680