Question

Accounting Manipulation Problems

a) The Office Supplies account had a $900 balance at the beginning of the current year; $400 of office supplies were purchased during the year; and the year-end balance sheet showed $300 of office supplies; office supplies expense for the year must have been ___________

b) The Prepaid Insurance account began the current year with a balance of $1,500; the income statement for the year showed Insurance Expense of 1,800; and the year-end balance sheet showed Prepaid Insurance of $1,800; cash paid for insurance during the year must have been $______________.

c) The Prepaid Insurance account began the current year with a balance of $1,500 and the year-end balance sheet showed Prepaid Insurance of $1,800; cash paid for insurance during the year was $2,400. How much insurance was used (expensed) during the year?

Answer 1

a) Office Supplies Account:

Particulars	Amount	Particulars	Amount
To opening Balance	$900	By Consumption / Expenses (bal. fig)	$1000
To purchase a/c	$400	By Closing Balance	$300
	$1300		$1300

b) Prepaid Insurance Account

Particulars	Amount	Particulars	Amount
To opening Balance	$1500	By Cash paid (bal. fig)	$1500
To Income Statement (P&L)	$1800	By Closing Balance	$1800
	$3300		$3300

c) Prepaid Insurance Account

Particulars	Amount	Particulars	Amount
To opening Balance	$1500	By Cash paid	$2400
To Income Statement (P&L) (Bal. fig.)	$2700	By Closing Balance	$1800
	$4200		$4200