E333B Learning Objective 3 Adjust the accounts Rockwell Comp

E3-33B. (Learning Objective 3: Adjust the accounts) Rockwell Company faced the follow ing situations. Journalize the adjusting entry needed at December 31, 2016, for each situation Consider each fact separately. LO a. The business has interest expense of $3,300 that it must pay early in January 2017. b. Interest revenue of $4,500 has been earned but not yet received c. On July 1, 2016, when the business collected $13,900 rent in advance, it debited Cash d. Salary expense is $5,500 per day-Monday through Friday-and the business pays em e. The unadjusted balance of the Supplies account is $2,800. The total cost of supplies on f. Equipment was purchased on January 1 of this year at a cost of $60,000. The equip- and credited Unearned Rent Revenue. The tenant was paying for two years\' rent. ployees each Friday. This year, December 31 falls on a Thursday. hand is $1,600. ment\'s useful life is five years. There is no residual value. Record depreciation for this year and then determine the equipment\'s book value.

Solution

a Interest expenses $    3,300 Interest payable $    3,300 b Accrued interest $    4,500 Interest income $    4,500 c Unearned rent revenue ($13,900/24*6 months) $    3,475 Rent revenue $    3,475 d Salary expenses ($5,500/5*4 days) $    4,400 Salaries and wages payable $    4,400 e Supplies expense ($2,800-$1,600) $    1,200 Supplies $    1,200 f Depreciation expense ($60,000/5 years) $ 12,000 Accumulated depreciation - Equipment $ 12,000