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Financial Accounting

Adjusting Entries

The following information for Marx Company is available on June 30, 2000, the end of a monthly accounting period. You are to prepare the necessary adjusting journal entries for Marx Company for the month of June for each situation given. Appropriate adjusting entries had been recorded in previous months. You may omit journal entry explanations.

1. Marx Company purchased a 2-year insurance policy on February 1, 2000 and debited Prepaid Insurance for $1,200.

2. On January 1, 2000, a tenant in an apartment building owned by Marx Company paid $4,500 which represents six months' rent in advance. The amount received was credited to the Unearned Rent account.

3. On June 1, 2000, the balance in the Office Supplies account was $200. During June, office supplies costing $480 were purchased. A physical count of office supplies at June 30 revealed that there was $140 still on hand.

4. Marx Company has two office employees who earn $80 and $100 per day, respectively. They are paid each Friday for a five-day work week that begins each Monday. June 30 is a Tuesday in 2000.

Solution Preview

Hi there,
<br>Here are your adjusting entries:
<br>1. Purchase of insurance policy in Feb. 4 months will have expired by the time June rolls around. At the time of the purchase in Feb, the entire insurance policy will have been prepaid. The following entry would have occurred:
<br>DR: Prepaid Insurance 1,200
<br>CR: Cash ...

Solution Summary

This problem involves the fundamentals of accounting