Answer:
1. Dr Insurance expense 2,100
Cr Prepaid insurance2,100
2. Dr Interest expense 2,750
Cr Interest payable 2,750
3. Dr Deferred rent revenue 7,200
Cr Rent revenue 7,200
4. Dr Depreciation expense 5,250
Cr Accumulated depreciation-building 5,250
5. Dr Salaries and wages expense 21,000
Cr Salaries and wages payable 21,000
Explanation:
Preparation of Journal entries
1. Based on the information given we were told that the company paid for its yearly fire insurance premium of the amount of $8,400 which means that the Journal entry will be:
Dr Insurance expense 2,100
($8,400 × 3/12)
Cr Prepaid insurance2,100
2. Based on the information given we were told that the company borrowed the amount of $137,500 from a local bank that include a principal and interest at 8% which means that the Journal entry will be:
Dr Interest expense 2,750
($137,500 × 8% × 3/12)
Cr Interest payable 2,750
3. Based on the information given we were told that the company collected the amount of $28,800 which represent rent for the year 2021 which means that the Journal entry will be:
Dr Deferred rent revenue 7,200
($28,800 × 3/12)
Cr Rent revenue 7,200
4. Based on the information given we were told that Depreciation on the office building cost the amount of $21,000 which means that the Journal entry will be:
Dr Depreciation expense 5,250
($21,000 × 3/12)
Cr Accumulated depreciation-building 5,250
5. Based on the information given we were told that the company employee salaries for the month of June 2021 which is the amount of $21,000 will be paid on July 20, 2021 which means that the Journal entry will be:
Dr Salaries and wages expense 21,000
Cr Salaries and wages payable 21,000
