The following transactions occurred during December 31, 2018, for the Microchip

Question

The following transactions occurred during December 31, 2018, for the Microchip Company. On October 1, 2018, Microchip lent $82,000 to another company. A note was signed with principal and 8% interest to be paid on September 30, 2019. On November 1, 2018, the company paid its landlord $6,900 representing rent for the months of November through January. Prepaid rent was debited. On August 1, 2018, collected $12,900 in advance rent from another company that is renting a portion of Microchip’s factory. The $12,900 represents one year’s rent and the entire amount was credited to rent revenue. Depreciation on office equipment is $4,800 for the year. Vacation pay for the year that had been earned by employees but not paid to them or recorded is $8,300. The company records vacation pay as salaries expense. Microchip began the year with $2,300 in its asset account, supplies. During the year, $6,800 in supplies were purchased and debited to supplies. At year-end, supplies costing $3,400 remain on hand. Prepare the necessary adjusting entries for each of the above situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Explanation / Answer

Prepare the necessary adjusting entries for each of the above situations.

Date account and explanation debit credit Dec 31 Interest receivable (82000*8%*3/12) 1640 Interest revenue 1640 (To record interest revenue) Dec 31 Rent expense (6900*2/3) 4600 Prepaid rent 4600 (To record rent expense) Dec 31 Rent revenue (12900*7/12) 7525 Unearned rent revenue 7525 (To record rent revenue) Dec 31 Depreciation expense 4800 Accumlated depreciation 4800 (To record depreciation expense) Dec 31 Salary expense 8300 Salary payable 8300 (To record salary expense) Dec 31 Supplies expense 5700 Supplies 5700 (To record supplies expense)

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.