Question

The following general ledger accounts and additional information are taken from the records of Wolfe Corporation at the end of its fiscal year, December 31, 2019 Additional information:
a. The prepaid insurance is for a one-year policy, effective July 1, 2019.
b. A physical count indicated that $500 of supplies is still on hand.
c. $50 of December rent expense has not been recorded.
101 Unused Supplies 173 Advertising Exp. 610 Bal 700 Bal. 200 Cash Bal 2,700 Accounts Receivable110 Bal. 2,000 Common Stock Bal 320 3,800 Salaries Expense 656 Bal. 4,500 161 654 Prepaid Insurance Bal. 1,200 Repair Revenue Bal 450 7,750 Rent Expense Bal. 250
Required:
1. Record all necessary adjusting entries in general journal format including general ledger account numbers. Assume the following account numbers: Insurance Expense: 631; Supplies Expense: 668.
2. Post the adjusting entries to T-accounts and calculate balances.
3. Prepare all closing entries in general Journal format. Include general ledger account numbers.
4. Post the closing entries to the applicable general ledger accounts.

Answer 1

Answer:

a. Prepaid insurance (Dr.) $600

cash (Cr.) $600

b. Supplies expense (Dr.) $200

Unused supplies (Cr.) $200

c. Rent expense (Dr.) $50

Cash (Cr.) $50

Explanation:

Insurance expense : $1,200 * 6 / 12 = $600.

Cash balance $2,700 - $600 - $50 = $2,050