Practice Examination
Combined Chapters 1-4
Dr. Fred Barbee
Solution to Problem #1
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ACCT 201 Principles of Financial Accounting Practice Examination Combined Chapters 1-4 Dr. Fred Barbee Solution to Problem #1 |
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| Prepare general journal entries on December 31 to record the following unrelated year-end adjustments. |
| a. | Depreciation on office equipment for the year is $4,000. |
| b. | The Prepaid Insurance account has a $4,680 debit balance before adjustment. An examination of insurance policies shows $950 of insurance expired. |
| c. | The company has three office employees who earn $100 per day for a five-day workweek that ends on Friday. The employees were paid on Friday, December 26, and have worked full days on Monday, Tuesday, and Wednesday, December 29, 30, and 31. |
| d. | On November 1, the company received 6 months' rent in advance from a tenant whose rent is $700 per month. The $4,200 was credited to the Unearned Rent account. |
| e. | The company collects rent monthly from its tenants. One tenant whose rent is $750 per month has not paid his rent for December. |
Solution
| Depreciation Expense - Office Equipment | 4,000 |
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| Accumulated Depreciation - Office Equip | 4,000 |
| Insurance Expense | 950 |
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| Prepaid Insurance | 950 |
| Office Salaries Expense | 900 |
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| Office Salaries Payable | 900 |
| Unearned Rent | 1,400 |
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| Rent Earned | 1,400 |
| Accounts Receivable (or Rent Receivable) | 700 |
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| Rent Earned | 700 |