Question

A review of the ledger of Cheyenne Corp. at December 31, 2022, produces the following data pertaining to the preparation of annual adjusting entries.

1.	Prepaid Insurance $17,328. The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on July 1, 2021, for $10,944. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2022, for $8,208. This policy has a term of 2 years.
2.	Unearned Rent Revenue $489,060. The company began subleasing office space in its new building on November 1, 2022. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease.

Date Nov. 1 Dec. 1 Term (in months) 9 6 Monthly Rent $5,700 $9,690 Number of Leases 5 4 3. Notes Payable $45,600. This balance consists of a note for 6 months at an annual interest rate of 7%, dated November 1. Interest will be paid at note maturity. 4. Salaries and Wages Payable $0. There are 8 salaried employees. Salaries are paid every Monday for the current week. 5 employees receive a salary of $684 each per week, and 3 employees earn $815 each per week. Assume December 31 is a Tuesday. Employees do not work weekends. All employees worked the last 2 days of December. Prepare the adjusting entries at December 31, 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Debit Credit No. Date Account Titles and Explanation Dec. 1. Insurance Expense 31 Prepaid Insurance 2. Dec. 31 Unearned Rent Revenue Rent Expense 3. Dec. 31 Interest Expense Interest Payable 4. Dec. 31 Salaries and Wages Expense Salaries and Wages Payable

Answer 1

Answer
	Journal entry
No.	Date	Account Titles and Explanations	Debit	Credit
1	Dec. 31	Insurance expense ($10,944*1/3)+($8208*1/2)	$           7,752
		To, Prepaid insurance		$           7,752
		[To record insurance expense]
2	Dec. 31	Unearned Rent Revenue	$         51,300
		To, Rent Revenue ($5700*5)+($5700*4)		$         51,300
		[To record revenue earned from Unearned]
3	Dec. 31	Interest expense ($45,600*7%*2/12)	$              532
		To, Interest payable		$              532
		[To record accrued interest]
4	Dec. 31	Salaries and wages Expenses	$           2,346
		To, Salaries and wages payable		$           2,346
		[To record accrued salaries and wages expense]

4) Working Note		Salaries and wages expense
		Type	Calculations	Total
		For 5 employees	[$684 x (2 days / 5 days x 5 employees]	$        1,368
		For 3 employees	[$815 x (2 days / 5 days) x 3 employees]	$           978
		Total		$        2,346
		*Assumed that 5 days work week.