Practice Exercise - Laurier Strictly Confidential

Table of Contents

Pearson Double Entry

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Prepare Journal Transactions for Laurier Inc.

For each of the following transactions, show how the expense will be recorded using the matching principle.

Transactions

1. Purchase a one year property insurance policy for 12,000 on October 1 of current accounting year which ends on December 31.
The payment was made in full on October 1 of the current year

2 Paid 2,500 of electric utility expense for the quarter ending December of the current accounting year which ends on December 31 on January 10th of the next year.
The utility expense is paid at the start of the month following the end of the quarter.

Journal Entries

1. Purchased property insurance Debit Credit

Insurance Expense (Income Statement)
Cash (Balance Sheet)
Prepayment (Balance Sheet)
Accruals (Balance Sheet)
– –

2 Paid electric bill Debit Credit

Utility Expense (Income Statement)
Cash (Balance Sheet)
Prepayment (Balance Sheet)
Accruals (Balance Sheet)
– –

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