Answer:
A. Equipment was purchased on January 1, 2019, for $49,770 and has an estimated useful life of 5 years with a salvage value of 4,270.
Depreciation is computed using the straight-line method.
depreciation expense per year = ($49,770 - $4,270) / 5 years = $9,100
depreciation expense per month = $9,100 / 12 = $758.33
January 31, 2019, depreciation expense
Dr Depreciation expense 758.33
Cr Accumulated depreciation - equipment 758.33
B. Signed a 5-month contract for $5,490 of prepaid advertising on January 1, 2019.
advertising expense per month = $5,490 / 5 = $1,098
January 31, 2019, advertising expense
Dr Advertising expense 1,098
Cr Prepaid advertising 1,098
C. Prepaid rent for the year on January 1, 2019, in the amount of 22,560.
rent expense per year = $22,560 / 12 = $1,880
January 31, 2019, rent expense
Dr Rent expense 1,880
Cr Prepaid rent 1,880
D. Purchased supplies for $4,200 on January 1, 2019. Inventory of supplies was $2,850 on January 31, 2019.
supplies expense = $4,200 - $2,850 = $1,350
January 31, 2019, supplies expense
Dr Supplies expense 1,350
Cr Supplies 1,350
