Answer:
1.Dr Depreciation expense 10,000
Cr Accumulated depreciation-equipment 10,000
2.Dr Salaries expense 1,500
Cr Salaries payable 1,500
3.Dr Interest expense 1,500
Cr Interest payable 1,500
4.Dr Interest receivable 1,333
Cr Interest revenue 1,333
5.Dr Insurance expense 1,500
Cr Prepaid insurance 1,500
6.Dr Supplies expense 700
Cr Supplies 700
7.Dr Sales revenue 2,000
Cr Unearned revenue 2,000
8.Dr Rent expense 1,000
Cr Prepaid rent 1,000
Explanation:
Preparation of Journal entries
1. Based on the information given we were told that Depreciation on office equipment for the year is the amount of $10,000 which means that the Journal entry will be recorded as:
Dr Depreciation expense 10,000
Cr Accumulated depreciation-equipment 10,000
2. Based on the information given we were told that Salaries earned from 16 December to December 31, 2021, were the amount of $1,500 which means that the Journal entry will be:
Dr Salaries expense 1,500
Cr Salaries payable 1,500
3. Based on the information given we were told that On October 1, 2021, they borrowed the amount of $50,000 with an interest note that have to be paid yearly on September 30 at 12% which means that the transaction will be recorded as:
Dr Interest expense 1,500
(50,000*12%*3/12)
Cr Interest payable 1,500
4. Based on the information given we were told that on March 1, 2021, the company borrowed a supplier the amount of $20,000 with an interest of 8% to be paid on February 28, 2022 which means that the transaction will be recorded as:
Dr Interest receivable 1,333
(20,000*8%*10/12)
Cr Interest revenue 1,333
5. Based on the information given we were told that on April 1, 2021, the company paid an the amount of $6,000 to an insurance company for a one-year fire insurance policy which means that the Journal entry will be:
Dr Insurance expense 1,500
(6,000*3/12)
Cr Prepaid insurance 1,500
Since it is a one year fire insurance we subtracted the different between the month of April 1st and December 31st .
Hence,
12 months- 9 months= 3 months
=6,000 x 3/12
= 1,500
6. Based on the information given we were told that the amount of $800 of supplies remained on hand at December 31, 2021 which means that the transaction will be recorded as:
Dr Supplies expense 700
(1,500-800)
Cr Supplies 700
7. Based on the information given we were told that a customer paid the amount of $2,000 in December which means that the transaction will be recorded as;
Dr Sales revenue 2,000
Cr Unearned revenue 2,000
8. Based on the information given we were told that the payment that was made represented rent for December 2021 and January 2022 at the amount of $1,000 per month which means that the Journal entry will be recorded as:
Dr Rent expense 1,000
Cr Prepaid rent 1,000
