The Righter Shoe Store Company prepares monthly financial statements for its ban

Question

The Righter Shoe Store Company prepares monthly financial statements for its bank. The November 3 and December 31, 2016, trial balances contained the following account information Nov. 30 Dec. 31 Dr. 3,300 7,800 Cr. Dr. 4,800 5,400 Cr Supplies Prepaid insurance Salaries and wages payable Deferred rent revenue 9,000 5,600 16,800 2,800 The following information also is known: a. The December income statement reported $3,800 in supplies expense. b. No insurance payments were recorded in December. c. $19,000 was paid to employees during December for salaries and wages. d. On November 1,2016, a tenant paid Righter $8,400 in advance rent for the period November throug January. Deferred rent revenue was credited. Required: 1. What was the cost of supplies purchased during December? Supplies 3,300 Beg. Bal End. Bal 2. What was the adjusting entry recorded at the end of December for prepaid insurance? Prepaid Insurance Beg. Bal. End. Bal.

Explanation / Answer

1 What was the cost of supplies purchased during December Supplies Beg Bal $3,300 Supplies Exp $3,800 Purchased $5,300 $8,600 $3,800 End Bal $4,800 Opening+Purchase-Exp = Ending balance $3300+Purchase-$3800 = $4800 Purchase = $ 5300 Cost of Supplies during December is $ 5300 2 What was the adjusting entry recorded at the end of December for prepaid insurance Prepaid Insurance Beg Bal $7,800 Expense $2,400 $2,400 End Bal $5,400 31-Dec-16 Insurance Expense $2,400 To Prepaid Insurance $2,400 (Being Insurance expense recorded) 3 What are the adjusting entry recorded at the end of December for accrued salaries and wages Salaries and Wages payable Beg Bal $19,000 Expense $19,000 End Bal $16,800 Salaries and wages Expense $16,800 To Salaries and Wages payable $16,800 (Being Accrued Salaries and wages recorded) 4 What was the amount of rent revenue recognized in December Deferred Rent Revenue Beg Bal $5,600 Revenue $2,800 End Bal $2,800 Rent Revenue in December $2,800 31-Dec-16 Deferred Rent Revenue $2,800 To Rent revenue $2,800 (Being rent for Dec recorded)

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