Arnez Company's annual accounting period ends on December 31, 2019. The following information concerns the adjusting...

Question

Arnez Company's annual accounting period ends on December 31, 2019. The following information concerns the adjusting entries to be recorded as of that date. a. The Office Supplies account started the year with a $4.475 balance. During 2019, the company purchased supplies for $18,482, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2019, totaled $3,938. b. An analysis of the company's insurance policies provided the following facts. Policy Months of Coverage Date of Purchase April 1, 2017 April 1, 2018 August 1, 2019 Cost $15,840 14,616 13,440 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 $2,950 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, 2019, is a Tuesday, and all 15 employees worked the first two days of that week. Because New Year's Day is a paid holiday, they will be paid salaries for five full days on Monday, January 6, 2020. d. The company purchased a building on January 1, 2019. It cost $965,000 and is expected to have a $45,000 salvage value at the end of its predicted 30-year life. Annual depreciation is $30,667. e. Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at $2,200 per month, starting on November 1, 2019. 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 $1,993 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. Assume no other adjusting entries are made during the year. Required: 1. Use the information to prepare adjusting entries as of December 31, 2019. 2. Prepare journal entries to record the first subsequent cash transaction in 2020 for parts c and e.

 · Answer

Question 1

Consumption	Dr	19,019
Office supplies	Cr	19,019
(4475+18482-3938)

Policy A (expense for 2019 =	15,840*3/12	$
Insurance	Dr	1,980
Prepaid insurance	Cr	1,980

Policy B (expense for 2019 =	14,616*12/36	$
Insurance	Dr	4,872
Prepaid Insurance	Cr	4,872

Policy C (expense for 2019 =	13,440*5/12	$
Insurance	Dr	5,600
Prepaid Insurance	Cr	5,600

(2,950152days)		$
Salaries	Dr	88,500
Salaries payable	Cr	88,500

Depreciation	Dr	30,667
Building	Cr	30,667
Depreciation = (965,000-45,000)/30

Rent receivable	Dr	2,200
Rental income	Cr	2,200
Rent receivable for December

Unearned rent	Dr	3,986
Rental income	Cr	3,986
2 months rent earned

Question 2

Salaries payable (2 days 2019)	Dr	88,500
Salaries (3 days 2020)	Dr	1,32,750
Cash	Cr	2,21,250

cash	Dr	4,400
Rent receivable (Dec 2019)	Cr	2,200
Rental income (Jan 2020)	Cr	2,200

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Arnez Company's annual accounting period ends on December 31, 2019. The following information concerns the adjusting...

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