1 A threeyear fire insurance policy was purchased on July 1

1. A three-year fire insurance policy was purchased on July 1, 2018, for $9,360. The company debited insurance expense for the entire amount. 2. Depreciation on equipment totaled $10,250 for the year. 3. Employee salaries of $12,500 for the month of December will be paid in early January 2019. 4. On November 1, 2018, the company borrowed $110,000 from a bank. The note requires principal and interest at 12% to be paid on April 30, 2019 5. On December 1, 2018, the company received $3,200 in cash from another company that is renting office space in Falwell\'s building. The payment, representing rent for December and January, was credited to deferred rent revenue.

Solution

No. Journal entry. Debit Credit

1. Prepaid insurance A/C 9,360

To insurance expense A/C. 9,360

2. Depreciation expense A/c. 10,250

To accumulated depreciation A/c . 10,250

3. Salaries expense A/c. 12,500

To salaries payable A/c. 12,500

4. Interest expense A/c . 2,200

To interest payable A/c. 2,200

5. Unearned rent revenue A/c . 1,600

To rent revenue A/c . 1,600