Question

Golden Eagle Company prepares monthly financial statements for its bank. The November 30 and December 31 adjusted trial balances include the following account information:
30-Nov 31-Dec
debit    credit debit credit
supplies $2,000 $3,500
prepaid Insurance $8,000 $6,000
salaries payable $11,000 $16,000
unearned revenue $3,000 $1,500

The following information also is known:
a. Purchases of supplies during December total $3,500.
b. Supplies on hand at the end of December equal $3,000.
c. No insurance payments are made in December.
d. Insurance cost is $1,500 per month.
e. November salaries payable of $10,000 were paid to employees in December. Additional salaries for December owed at the end of the year are $15,000. On November 1, a tenant paid Golden Eagle $3,000 in advance rent for the period November through January, and Deferred Revenue was credited for the entire amount.

Required:
Show the adjusting entries that were made for supplies, prepaid insurance, salaries payable, and unearned revenue on December 31.

Answer 1

Answer:

Golden Eagle Company

Adjusting Journal Entries:

a. Debit Supplies $3,500

Credit Cash $3,500

To record the purchase of supplies during December.

b. Debit Supplies Expense $2,500

Credit Supplies $2,500

To record the used supplies for the month.

d. Debit Insurance Expense $1,500

Credit Prepaid Insurance $1,500

To record expired insurance expense for the month.

e. Debit Salaries Payable $10,000

Credit Cash $10,000

To record the payment of salary arrears.

f. Debit Salaries Expense $15,000

Credit Salaries Payable $15,000

To record unpaid salaries for the month.

g. Debit Unearned Revenue $1,000

Credit Earned Revenue $1,000

To record earned revenue for the month.

Explanation:

a) Data and Calculations:

Golden Eagle Company

Adjusted Trial Balances as of November 30 and December 31 (Partial):

                                      30-Nov             31-Dec

                                 Debit  Credit     Debit   Credit

supplies                  $2,000             $3,500

prepaid Insurance $8,000              $6,000

salaries payable               $11,000               $16,000

unearned revenue           $3,000                 $1,500

Adjusting Entries for Supplies, Prepaid Insurance, Salaries Payable and Unearned Revenue on December 31:

a. Supplies $3,500 Cash $3,500

b. Supplies Expense $2,500 Supplies $2,500

d. Insurance Expense $1,500 Prepaid Insurance $1,500

e. Salaries Payable $10,000 Cash $10,000

f. Salaries Expense $15,000 Salaries Payable $15,000

g. Unearned Revenue $1,000 Earned Revenue $1,000