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1. A physical count of office supplies revealed 1,200 on hand on December 31
2. The two year insurance policy was purchased on June 1 2009 for 4,800
3. Office equipment is depreciated at 4,200 per year
4. The amount of rent received in advance that remains unearned at December 31 is 500
5. The service provided but not yet billed totaled 5,000
6. Annual interest rate on note payable is 6% the note of 12,000 was outstanding the full year and interest will not be paid until 2010

December 31, 2009 partial trial balance is below
Office supplies 4,000 (debit)
Prepaid insurance 4,800 (debit)
equipment 16,200 (debit)
Accumulated depreciation รข?" equipment 0 (credit)
Unearned rent revenue 1,200 (credit)
Note payable 12,000 (credit)

#### Solution Preview

1. A physical count of office supplies revealed 1,200 on hand on December 31

The book balance is 4,000 and actual is 1,200 so 2,800 of supplies is consumed. The adjusting entry is
Supplies Expense Dr 2,800
Office Supplies Cr 2,800

2. The two year insurance policy was purchased on June 1 2009 for 4,800

Insurance is expiring at the rate of 4,800/24 = \$200 ...

#### Solution Summary

The solution explains how to prepare adjusting entries

\$2.19