Question

Exercise 3-12A Record year-end adjusting entries (LO3-3) Below are transactions for Wolverine Company during 2021. 1. On December 1, 2021, Wolverine receives $3,600 cash from a company that is renting office space from Wolverine. The payment, representing rent for December and January, is credited to Deferred Revenue. 2. Wolverine purchases a one-year property insurance policy on July 1, 2021, for $12,720. The payment is debited to Prepaid Insurance for the entire amount 3. Employee salaries of $2,600 for the month of December will be paid in early January 2022 4. On November 1, 2021, the company borrows $13.000 from a bank. The loan requires principal and interest at 12% to be paid on October 30, 2022 5. Office supplies at the beginning of 2021 total $960. On August 15, Wolverine purchases an additional $3,000 of office supplies, debiting the Supplies account. By the end of the year, $460 of office supplies remains. Required: Record the necessary adjusting entries at December 31, 2021, for Wolverine Company. You do not need to record transactions made during the year. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round Intermediate calculations.) View transaction list Journal entry worksheet ( 1 2 3 4 5 On December 1, 2021, Wolverine receives $3,600 cash from a company that is renting office space from Wolverine. The payment, representing rent for < Prex 3 of 6 8 Next >

Answer 1

Date	Account Titles And Explanations	Debit	Credit
1)	Deferred Revenue (3600/2)	$  1,800.00
	Service Revenue		$  1,800.00
	(Recognize revenue for one month = $3,600 ÷ 2 months received )
2)	Insurance Expense	$  6,360.00
	Prepaid Insurance		$  6,360.00
	Recognize insurance expense for 6 months = $12,720/12 x 6)
3)	Salaries Expense	$  2,600.00
	Salaries Payable		$  2,600.00
	(Record salaries owed at December 31)
4)	Interest Expense	$     260.00
	Interest Payable		$     260.00
	(Record interest expense; $13,000 × 0.12 × 2/12 = $260
5)	Supplies Expense	$  3,500.00
	Supplies		$  3,500.00
	Office supplies used during year; $960  +$3,000 – $460