M4-6 Recording Adjusting Journal Entries [LO 4-2] For each of the following tran

Question

M4-6 Recording Adjusting Journal Entries [LO 4-2] For each of the following transactions for the Sky Blue Corporation, prepare the adjusting journal entries required on October 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

a. Collected $3,300 rent for the period October 1 to December 31, which was credited to Unearned Revenue on October 1.

b. Paid $1,920 for a two-year insurance premium on October 1 and debited Prepaid Insurance for that amount.

c. Used a machine purchased on October 1 for $51,600. The company estimates annual depreciation of $5,160.

Explanation / Answer

Adjusting journal entries on October 31: No. Date General Journal Debit Credit a. October 31 Unearned revenue $       1,100 Revenue $       1,100 (To record revenue earned) Working: Monthly Revenue = $ 3300 x 1/3 = $       1,100 b. October 31 Insurance Expense $ 80 Prepaid Insurance $ 80 (To record insurance expense for October) Total premium paid $       1,920 Period covered 24 Monthly Insurance $ 80 c. October 31 Depreciation Expense $ 430 Accumulated Depreciation $ 430 (To record depreciation expense for October) Annual Depreciation $       5,160 Monthly Depreciation $       5,160 / 12 = $           430

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