Question

Here is the problem: Slimbuster, Inc. adjusts its books only on an annual basis. Among other items, the trial balance of Slimbuster at December 31, 2019 includes the following account balances: Prepaid Insurance $14,000 debit balance Prepaid Rent $22,100 debit balance Supplies on Hand $2,400 debit balance Examination of the cords shows that adjustments should be made for the following: A. Of the prepaid insurance on the trial balance, $2,300 is for insurance coverage during the months after December 31, 2019. B. The balance in the Prepaid Rent account on the trial balance is for a 12-month period that started October 1, 2019. c. Interest income in the amount of $300 has been earned by Slimbuster, but not yet received as of December 31, 2019. D. Supplies used up during 2019 amount to $2,000. E. Salaries earned since the last payday but unpaid by Slimbuster as of December 31, 2019 amount to $4,200. Required: Prepare the annual year-end adjusting journal entries required at December 31, 2019.

Answer 1

	Slimbuster Inc.
	Journal entries
No.	Date	Account	Debit	Credit	Calculation
A	31-Dec	Insurance expense	$     11,700		14000-2300
		Prepaid Insurance		$     11,700
B	31-Dec	Rent expense	$        5,525		22100/12*3 months
		Prepaid Rent		$        5,525	Oct to Dec-3 months
C	31-Dec	Interest Receivable	$           300
		Interest Revenue		$           300
D	31-Dec	Supplies expense	$        2,000
		Supplies on Hand		$        2,000
E	31-Dec	Salaries expense	$        4,200
		Salaries Payable		$        4,200