university of california Operations And Supply Chain Management Assignment Help - journal entries

Question - Problem 3-2A Preparing adjusting and subsequent journal entries LO C1, A1, P1
Arnez Co. follows the practice of recording prepaid expenses and unearned revenues in balance
sheet accounts. The company's annual accounting period ends on December 31, 2013. The following
information concerns the adjusting entries to be recorded as of that date.

a.
The Office Supplies account started the year with a $4,000 balance. During 2013, the company
purchased supplies for $13,400, which was added to the Office Supplies account. The inventory of
supplies available at December 31, 2013, totaled $2,554.

b. An analysis of the company's insurance policies provided the following facts.

Policy Date of Purchase Months of Coverage Cost
A April 1, 2 ...Read More 012 24 $ 14,400
B April 1, 2013 36 12,960
C August 1, 2013 12 2,400


The total premium for each policy was paid in full (for all months) at the purchase date, and the
Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid
Insurance were properly recorded in all prior years.)

c.
The company has 15 employees, who earn a total of $1,960 in salaries each working day. They
are paid each Monday for their work in the five-day workweek ending on the previous Friday.
Assume that December 31, 2013, is a Tuesday, and all 15 employees worked the first two days of
that week. Because New Year%u2019s Day is a paid holiday, they will be paid salaries for five full
days on Monday, January 6, 2014.

d. The company purchased a building on January 1, 2013. It cost $960,000 and is expected to have
a $45,000 salvage value at the end of its predicted 30-year life. Annual depreciation is $30,500.
e.
Since the company is not large enough to occupy the entire building it owns, it rented space to a
tenant at $3,000 per month, starting on November 1, 2013. The rent was paid on time on
November 1, and the amount received was credited to the Rent Earned account. However, the
tenant has not paid the December rent. The company has worked out an agreement with the
tenant, who has promised to pay both December and January rent in full on January 15. The
tenant has agreed not to fall behind again.
f.
On November 1, the company rented space to another tenant for $2,800 per month. The tenant
paid five months' rent in advance on that date. The payment was recorded with a credit to the
Unearned Rent account. ...Read Less

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