Question

Record year-end adjusting entries (LO3-3) Consider the following transactions for Huskies Insurance Company: a. Equipment costing $36,000 is purchased at the beginning of the year for cash. Depreciation on the equipment is $6,000 per year. b. On June 30, the company lends its chief financial officer $40,000; principal and interest at 6% are due in one year. c. On October 1, the company receives $12,000 from a customer for a one-year property insurance policy. Deferred Revenue is credited Required For each item, record the necessary adjusting entry for Huskies Insurance at its year-end of December 31. No adjusting entries were made during the year.

Answer 1

Answer:

depreciation expense 6,000 debit

   acc dep equipment        6,000 credit

--to record depreication on equipment --

interest receivables    1,200 debit

          interest revenue      1,200 credit

--to record accrued interest on note payable--

Unearned revenue    3,000 debit

          insurance revenue   3,000 credit

--to record accrued insurance premium--

Explanation:

accrued interest:

principal x rate x time

being rate and time expressed in the same measurement

40,000 x 0.06 x 1/2 = 1,200 accrued interest

insurance:

12,000 will be the contract ofr a year therefore, 1,000 per month

from October 1st to December 31th 3 months accrued