Question

14) Prior to recording adjusting entries, the Office Supplies account had a $500 debit balance. A physical count of the supplies showed $285 of unused supplies available. The required adjusting entry is: 15) On July 1, a company paid the $7,800 premium on a one-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the first year ended December 31?

Answer 1

Q14-Office Supplies Expense A/c Debit $315

Supplies A/c Credit $315

The above journal entry will result into balance of $285 in Supplies A/c(Current Asset) in the books.

Q-15. Insurance Expense incurred $7,800 for the period 1st July to 30th June. Since the accounting year ends on 31st December expense needs to be considered only for 6Months (i.e 1st July to 31st Dec). Hence amount of $3900 will be recorded as insurance expense in the income statement for the first year ended december 31. Below will be the jounral entry as on 31st Dec.

Prepaid Insurance Expense A/c Debit $3900

Insurance Expense a/c Credit $3900