Question

The following transactions occurred during December 31, 2021, for the Falwell Company.

Answer 1

Answer and Explanation:

The journal entries are shown below:

1. Prepaid insurance ($9,000*30/36) $7,500

   To Insurance expense  $7,500

(Being prepaid insurance is recorded)

2. Depreciation expense $10,000

    To Accumulated depreciation-Equipment $10,000

(Being the depreciation expense is recorded)

3. Salaries expense $12,000

    To Salaries payable $12,000

(Being the salaries expense is recorded)

4. Interest expense ($100,000 × 12% × 2 ÷ 12) $2,000  

      To Interest payable $2,000

(Being the interest expense is recorded)

5. Deferred rent revenue ($3,300 ÷ 3) $1,100

         To Rent revenue $1,100

(Being the deferred rent revenue is recorded)

6. Rent revenue $2,200

      To Deferred rent revenue $2,200

(Being the rent revenue is recorded)