Answer:
See the entries for (1) and (2) below.
Explanation:
1. Prepare any necessary adjusting entries on December 31, 2018.
<u>SN Details Dr ($) Cr ($) </u>
A. Insurance expenses (W. 1) 18,000
Prepaid Insurance 18,000
<u> </u><em><u> (To record insurance expenses for 2018.) </u></em><u> </u>
B. Salaries expenses 200,550
Accrued expenses - Salaries 200,550
<em><u> (To record unpaid salaries). </u></em>
C. Rent revenue 2,400
Advance revenue - Rent 2,400
<em><u> (To record liability for rent received for Jan. 31, 2019) </u></em>
D. Accrued interest income (W.2) 550
Interest income 550
<em><u> (To record accrued interest income for 2018). </u></em>
2. Prepare the journal entry to record the receipt of interest on June 30, 2019.
<u>SN Details Dr ($) Cr ($) </u>
A. Cash 1,100
Interest income 550
Accrued interest income (W.2) 550
<u> </u><em><u> (To record the receipt of interest income.) </u></em><u> </u>
Workings:
W.1. Insurance expenses for 2018 (9 months: April 1 - December 31 = $96,000 * [9 months /(4 years * 12 months) = $18,000
W.1 Accrued interest revenue (July 1 to December 31) = $1,100 * (6 months / 12 months) = $550