The following transactions occurred during December 31 2018

The following transactions occurred during December 31, 2018, for the Microchip Company I. On October 1, 2018, Microchip lent $93,000 to another company. A note was signed with principal and 10% interest to be paid on September 30, 2019. 2. On November 1, 2018, the company paid its landlord $10,200 representing rent for the months of November through January Prepaid rent was debited. 3. On August 1, 2018, collected $16,200 in advance rent from another company that is renting a portion of Microchip\'s factory. The $16,200 represents one year\'s rent and the entire amount was credited to rent revenue. 4. Depreciation on office equipment is $5,900 for the year. 5. Vacation pay for the year that had been earned by employees but not paid to them or recorded is $9,400. The company records vacation pay as salaries expense. 6. Microchip began the year with $3,400 in its asset account, supplies. During the year, $7,900 in supplies were purchased and debited to supplies. At year-end, supplies costing $3,950 remain on hand. Prepare the necessary adjusting entries for each of the above situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. (If no entry is required for a transaction/event, select \"No journal entry required\" in the first account field.)

Solution

Answer

Date

Dr. $

Cr. $

1.

Interest Receivable

2,325

Interest Revenue

2,325

(Being Interest for 3 months (From Oct to Dec.) i.e. $93,000*10%*3/12 months due

2.

Rent Expense ($10,200 * 2/3 months)

6,800

Prepaid Rent

6,800

(Being rent for 2 months i.e. November and December adjusted)

3.

Rent Revenue ($16,200 * 7/12 months)

9,450

Deferred Rent Revenue

9,450

(Being rent for 7 months credited to rent revenue now adjusted)

4.

Depreciation

5,900

Accumulated Depreciation

5,900

(Being depreciation recorded)

5.

Salaries expense

9,400

Salaries Payable

9,400

(Being vocation expense recorded)

6.

Supplies expense (3400 + 7900 - 3950)

7,350

Supplies

7,350

(Being supplies expense recorded)

Supplies expense = Opening balance + purchased - closing

Date		Dr. $	Cr. $
1.	Interest Receivable	2,325
	Interest Revenue		2,325
	(Being Interest for 3 months (From Oct to Dec.) i.e. $93,000*10%*3/12 months due
2.	Rent Expense ($10,200 * 2/3 months)	6,800
	Prepaid Rent		6,800
	(Being rent for 2 months i.e. November and December adjusted)
3.	Rent Revenue ($16,200 * 7/12 months)	9,450
	Deferred Rent Revenue		9,450
	(Being rent for 7 months credited to rent revenue now adjusted)
4.	Depreciation	5,900
	Accumulated Depreciation		5,900
	(Being depreciation recorded)
5.	Salaries expense	9,400
	Salaries Payable		9,400
	(Being vocation expense recorded)
6.	Supplies expense (3400 + 7900 - 3950)	7,350
	Supplies		7,350
	(Being supplies expense recorded)