Question

A partial adjusted trial balance of Piper Company at January 31, 2017, shows the following:

Answer 1

Answer:

(a) If the amount in Supplies Expense is the January 31 adjusting entry, and $850 of supplies was purchased in January, what was the balance in Supplies on January 1?

• supply balance January 31 + supplies expense - purchases = $700 + $950 - $850 = $800

(b) If the amount in Insurance Expense is the January 31 adjusting entry, and the original insurance premium was for one year, what was the total premium and when was the policy purchased?

• Insurance expense per month = $400 x 12 months = $4,800, beginning balance prepaid insurance January 1 = $2,800. This means that the insurance policy was purchased ($4,800 - $2,800) / $400 = 5 months before, this means it was purchased in August, 2016.

(c) If $2,500 of salaries was paid in January, what was the balance in Salaries and Wages Payable on December 31, 2016?

• wages payable on December 31, 2016 = salaries expenses + wages payable balance January 31, - paid salaries = $1,800 + $800 - $2,500 = $100

(d) If $1,600 was received in January for services performed in January, what was the balance in Unearned Service Revenue at December 31, 2016?

• unearned service revenue on December 31, 2016 = cash received for providing services - service revenue + unearned service revenue balance January 31 = $1,600 - $2,000 + $750 = $350