Answer:
1.. Rent Expense Dr: $2,000
Prepaid Rent Cr. $2,000
G
2. Interest Expense Dr. $1,000
Interest Payable Cr. $1,000
E
3. Depreciation Expense Dr. $4,000
Accumulated Depreciation Cr. $4,000
I
4. Unearned Professional Fees Dr. $3,000
Professional Fees Earned Cr. $3,000
B
5. Insurance Expense Dr. $4,200
Prepaid Insurance Cr. $4,200
G
6. Salaries Payable Dr. $1,400
Cash Cr. $1,400
C
7. Prepaid Rent Dr. $4,500
Cash Cr. $4,500
H
8. Salaries Expense Dr. $6,000
Salaries Payable Cr. $6,000
E
9. Interest Receivable Dr. $5,000
Interest Revenue Cr. $5,000
F
10. Cash Dr. $9,000
Accounts Receivable (from consulting) Cr. $9,000
D
11. Cash Dr. $7,500
Unearned Professional Fees Cr. $7,500
A
12. Cash Dr. $2,000
Interest Receivable Cr. $2,000
D
Explanation:
When a fee is received in advance for a service yet to be rendered, the revenue for such fee is said to be unearned. The entries required are
Debit Cash account and Credit Unearned fees or deferred revenue.
As the service is performed and the revenue is earned, debit Unearned fees and credit revenue.
When revenue is earned but cash is yet to be received,
Debit Accounts receivable
Credit Revenue account
When cash is received,
Debit Cash account
Credit Accounts receivable.
When insurance is paid in advance, the entries required are
Debit Prepaid Insurance
Credit Cash account
As time elapses and the insurance expires,
Debit Insurance expense
To record depreciation of an asset, Debit depreciation expense account , credit Accumulated depreciation expense account.
