Recording adjusting Journal Entries Prepare the adjusting journal entries requir

Question

Recording adjusting Journal Entries Prepare the adjusting journal entries require on December 31, 2012. (if no entry is required for a transaction/event, select "No Journal Entry Required" In the first account field.) Collected 52,400 rent for the period December 1, 2012, to February 28, 2013, which was credited to Unearned Revenue on December 1, 2012. Paid $1, 200 for a two-year insurance premium on December 1, 2012, and debited Prepaid Insurance for that amount. Used a machine purchased on December 1, 2012, for $48,000. The company estimates annual depreciation of $4,8000.

Explanation / Answer

a) Here rent amount is for the 3 months from Dec'12 to Feb'13. Hence as on 31-Dec-2012 only two month's rent is remaining unearned. The rent for the month of Dec'12 to be accounted as revenue by transfering from unearned revenue (Rent for Dec'12 = $2,400/3 = $800).

b) Insurance amount per month = Total Expense/Total Period = $1,200/24 = $50

Expired Period = 1 month (Dec'12)

Prepaid Period = 23 months

Here, proportionate expense for the one month need to be accounted

c) Here we need to provide for the depreciation expense for 1 month on proportionate basis.

Depreciation per year = $4,800

Depreciation per month = $4,800/12 = $400

Date General Journal Debit ($) Credit ($) 31-Dec-2012 Unearned Revenue 800 31-Dec-2012 Rent Revenue 800

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