More Info On April 1 a business collected 3900 rent in advan

More Info On April 1, a business collected $3,900 rent in advance, debiting Cash and crediting Unearned Revenue. The tenant was paying one year\'s rent in advance. On December 31, the business must account for the amount of rent it has earned. a. b. Salaries expense is $1,000 per day Monday through Friday-and the business pays c. The unadjusted balance of the Office Supplies account is $3,300. Office supplies on hand total d. Equipment depreciation was $400. employees each Friday. This year December 31 falls on a Thursday. $1,400. e. On October 1, when the business prepaid $4,320 for a two-year insurance policy, the business debited Prepaid Insurance and credited Cash.

Solution

Answer

S. No.

Dr. $

Cr. $

a.

Unearned Rent Revenue

2,925

Rent Revenue

2,925

(Being Rent for 9 Months credited to rent revenue $3,900*9/12 months)

b.

Salary Expense

4,000

Salary Payable

4,000

(Being Salary for 4 Days due i.e. $1,000 * 4 Days)

c.

Supplies Expense

1,900

Office Supply

1,900

(Being Supplies Expense recorded)

d.

Depreciation on Equipment

400

Accumulated Depreciation

400

(Being Depreciation recorded)

e.

Insurance Expense

540

Prepaid Insurance

540

(Being Insurance expense of this year recorded

$4,320 * 3/24 months)

Note: Insurance is paid for 24 months (2 Year) on Oct 1 and this year expense is only for 3 months (Oct – Dec)

Note: Supplies expense is Unadjusted balance of office supplies less closing office Supplies i.e. (3,300 – 1,400)

S. No.		Dr. $	Cr. $
a.	Unearned Rent Revenue	2,925
	Rent Revenue		2,925
	(Being Rent for 9 Months credited to rent revenue $3,900*9/12 months)
b.	Salary Expense	4,000
	Salary Payable		4,000
	(Being Salary for 4 Days due i.e. $1,000 * 4 Days)
c.	Supplies Expense	1,900
	Office Supply		1,900
	(Being Supplies Expense recorded)
d.	Depreciation on Equipment	400
	Accumulated Depreciation		400
	(Being Depreciation recorded)
e.	Insurance Expense	540
	Prepaid Insurance		540
	(Being Insurance expense of this year recorded $4,320 * 3/24 months)