a. Isaiah Corporation paid $1800 for two months rent in advance on December 1, 2
ID: 2466408 • Letter: A
Question
a. Isaiah Corporation paid $1800 for two months rent in advance on December 1, 2016. The company was able to obtain an excellent rental rate due to the fact that they have a very good credit rating. Rent for other companies in the same geographic area average $2300 per month.
b. Specialized equipment was purchased by the corporation for $15,000. This equipment is estimated to be serviceable for three years, after which it will be sold for $2400. It was purchased on December 13, 2016. For depreciation calculation purposes, Isaiah Corporation follows the standard practice of recording all purchases as of the beginning of the month if purchased before the 16th of the month. Isaiah uses the straight-line method of estimating depreciation.
c. Isaiah Corporation has two employees who each earn $100 a day and work a five-day workweek from Monday through Friday. They are paid weekly every Friday. This year, December 31st falls on a Wednesday.
d. The company rents out office space because it has more rooms than necessary for its own operations in the building it rents. Isaiah Corporation currently rents a small office space to an aspiring lawyer for $100 per month, payable at the end of each month. The tenant paid Isaiah Corporation $1000 for ten months rent in advance to lock in on an incredibly good rental price for the office. His check for the $1000 was given to Isaiah Corporation on November 1, 2016 and cleared the bank on the same day.
e. During the year, Isaiah Corporation issued a promissory note for $5000 payable to Stoney, Incorporated. The note is a nine month note which carries a face rate of 6.24%. As of December 31, 2016, $50 of interest have accrued on the note.
f. During the year, Isaiah Corporation made a number of supply purchases. Its first purchase was for $452. Its next purchase totaled $627 and it’s last purchase of the year for supplies in December was for $121. At year-end, December 31, 2016, employees reported a total of $180 of supplies still on hand in the supplies closet after a detailed inventory was taken.
Dr.
Cr.
Cash
$6700
Accounts Receivable
1000
Prepaid Rent
1800
Supplies
1200
Equipment
15000
Accumulated Depreciation-Equipment
Notes Payable
$5000
Accounts Payable
1070
Salaries Payable
Interest Payable
Unearned Rent Revenue
1000
Common Stock
14000
Retained Earnings
0
Dividends
600
Service Revenue
14700
Rent Revenue
700
Salaries and Wages Expense
8800
Rent Expense
900
Depreciation Expense
Supplies Expense
Utilities Expense
470
Interest Expense
Dr.
Cr.
Cash
$6700
Accounts Receivable
1000
Prepaid Rent
1800
Supplies
1200
Equipment
15000
Accumulated Depreciation-Equipment
Notes Payable
$5000
Accounts Payable
1070
Salaries Payable
Interest Payable
Unearned Rent Revenue
1000
Common Stock
14000
Retained Earnings
0
Dividends
600
Service Revenue
14700
Rent Revenue
700
Salaries and Wages Expense
8800
Rent Expense
900
Depreciation Expense
Supplies Expense
Utilities Expense
470
Interest Expense
Explanation / Answer
Adjusting entries:
Sl. no Account Titles Debit Credit $ $ a. Rent expense 900 Prepaid rent 900 b. Depreciation expense 350 Accumulated depreciation 350 c. Wages expense 600 Wages payable 600 d. Unearned rent revenue 200 Rent revenue 200 e. Interest expense 50 Interest payable 50 f. Supplies expense 1,020 Supplies 1,020Related Questions
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