PROBLEM I

Page 1

Date Description P.R. Debit Credit

2019
Dec 31 Prepaid Insurance 100,000
Insurance Expense 100,000
To record unexpired portion of the insurance
(120,000 * 20/24)

Dec 31 Rent Income 42,000

Unearned Rent Income 42,000
To record unearned portion of the rent income received
(63,000 * 6/9)

Dec 31 Depreciation Expense - Machinery 95,625

Accumulated Depreciation - Machinery 95,625
To record depreciation of machinery for the year
[(300,000 * 25%) + (110,000 * 25% * 9/12)]

Dec 31 Commissions Receivable 50,000

Commissions Income 50,000
To record commissions earned but uncollected

Dec 31 Supplies Expense 23,000

Supplies 23,000
To record supplies consumed during the period

Dec 31 Unearned Subscriptions Revenue 41,250

Subscriptions Revenue 41,250
To record subscriptions revenue earned during the period
(75,000 * 55%)

Dec 31 Interest Expense 2,200

Interest Payable 2,200
To record accrued interest on notes issued
(240,000 * 11% * 30/360)

Dec 31 Fees Collected in Advance 175,000

Fees Earned 175,000
To record fees already earned during the period
(250,000 * 70%)

Dec 31 Interest Receivable 1,800

Interest Income 1,800
To record interest earned on notes received fom customers
[180,000 * 8% * (45/360)]

Dec 31 Insurance Expense 195,000

Prepaid Insurance 195,000
To record expired portion of the insurance
[(300,000 * 10/24) + (210,000 * 4/12)]
 PROBLEM II
Page 1

Date Description Debit Credit

2019
Dec 31 Salaries Expense 8,400
Salaries Payable 8,400
To record salaries incurred but unpaid as of yearend
(650 * 4) + (700 * 4) + (750 * 4)

Dec 31 Unearned Interest Income 25,000

Interest Income 25,000
To record interest income already earned

Dec 31 Prepaid Interest 5,500

Interest Expense 5,500
To record interest paid in advance

Dec 31 Supplies Expense 15,300

Supplies 15,300
To record supplies used during the period
(25,000 - 9,700)

Dec 31 Interest Expense 2,400

Interest Payable 2,400
To record accrued interest on notes issued
(160,000 * 12% * 45/360)

Dec 31 Interest Receivable 6,250

Interest Income 6,250
To record interest earned on notes received fom customers
[250,000 * 15% * (60/360)]

Dec 31 Depreciation Expense - Office Equipment 11,250

Accumulated Depreciation - Office Equipment 11,250
To record depreciation of office equipment
(80,000-5,000)/5 = 15,000
15,000 * 9/12 = 11,250

Dec 31 Advertising Expense 48,000

Prepaid Advertising 48,000
To record expired portion of the prepaid advertisement
(80,000 * 60%)

Dec 31 Depreciation Expense - Furniture 25,000

Accumulated Depreciation - Furniture 25,000
To record depreciation of furniture
(75,000 /3)

Dec 31 Taxes and Licenses 17,000

Salaries Expenses 30,000
Accrued Expenses - Taxes and Licenses 17,000
Salaries Payable 30,000
To record unpaid taxes and salaries as of yearend