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    A. The Office Supplies Account Started The Fiscal Year With A $500 Balance. During The Fiscal Year

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    mohitgaba19
    Nomo Co. recorded adjusting entries as of October 31, 2011 for various prepaid expenses and unearned revenues. Adjusting entries were needed for office supplies, prepaid insurance, accrued salaries, depreciation on a building, rent receivable, and unearned rent. On November 7, 2011, the company paid accrued salaries of $3,200 and collected rent receivable of $600.

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    A. The Office Supplies Account Started The Fiscal Year With A $500 Balance. During The Fiscal Year

    Uploaded by

    mohitgaba19
    126 views4 pages
    Nomo Co. recorded adjusting entries as of October 31, 2011 for various prepaid expenses and unearned revenues. Adjusting entries were needed for office supplies, prepaid insurance, accrued salaries, depreciation on a building, rent receivable, and unearned rent. On November 7, 2011, the company paid accrued salaries of $3,200 and collected rent receivable of $600.

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    Nomo Co. recorded adjusting entries as of October 31, 2011 for various prepaid expenses and unearned revenues. Adjusting entries were needed for office supplies, prepaid insurance, accrued salaries, depreciation on a building, rent receivable, and unearned rent. On November 7, 2011, the company paid accrued salaries of $3,200 and collected rent receivable of $600.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    126 views4 pages

    A. The Office Supplies Account Started The Fiscal Year With A $500 Balance. During The Fiscal Year

    Uploaded by

    mohitgaba19
    Nomo Co. recorded adjusting entries as of October 31, 2011 for various prepaid expenses and unearned revenues. Adjusting entries were needed for office supplies, prepaid insurance, accrued salaries, depreciation on a building, rent receivable, and unearned rent. On November 7, 2011, the company paid accrued salaries of $3,200 and collected rent receivable of $600.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 4

    Nomo Co.

    follows the practice of recording prepaid expenses and unearned revenues in balance
    sheet accounts. The company’s annual accounting period ends on October 31, 2011. The
    following information concerns the adjusting entries that need to be recorded as of that date.
    a. The Office Supplies account started the fiscal year with a $500 balance. During the fiscal year,
    the company purchased supplies for $3,650, which was added to the Office Supplies account.
    The supplies available at October 31, 2011, totaled $700.
    b. An analysis of the company’s insurance policies provided the following facts.
    Policy

    A
    B
    C

    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 fiscal years.)
    c. The company has four employees, who earn a total of $800 for each workday. They are paid
    each Monday for their work in the five-day workweek ending on the previous Friday. Assume
    that October 31, 2011, is a Monday, and all four employees worked the first day of that week.
    They will be paid salaries for five full days on Monday, November 7, 2011.
    d. The company purchased a building on November 1, 2010, that cost $155,000 and is expected
    to have a $20,000 salvage value at the end of its predicted 25-year life. Annual depreciation is
    $5,400.
    e. Since the company does not occupy the entire building it owns, it rented space to a tenant at
    $600 per month, starting on September 1, 2011. The rent was paid on time on September 1, and
    the amount received was credited to the Rent Earned account. However, the October rent has
    not been paid. The company has worked out an agreement with the tenant, who has promised
    to pay both October and
    November rent in full on November 15. The tenant has agreed not to fall behind again.
    f. On September 1, the company rented space to another tenant for $525 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.
    Required
    1. Use the information to prepare adjusting entries as of October 31, 2011.
    2. Prepare journal entries to record the first subsequent cash transaction in November 2011 for
    parts c and e.
    Date of Purchase Months of Cost S.No
    Coverage a
    April 1, 2010 24 3000 125 1500
    April 1, 2011 36 3,600 100 1000
    August 1, 2011 12 660 55 165
    2665 b

    155000
    20000
    1200 135000 e
    25

    f
    3450

    Answer 1
    Journal Entries
    Accounts Title Debit Credit
    Supplies expense $ 3,450
    Supplies $ 3,450
    ($ 500 add $ 3,650 less $ 700)

    Insurance expense $ 2,665

    Prepaid Insurance $ 2,665

    ($ 3,000/24 months * 12 months add $ 3,600/36 months


    * 10 months add $ 660/12 months * 3 months)

    Salaries expense $ 3,200


    Salaries payable $ 3,200

    ($ 800 per day * 4 employees * 1 day)

    Depreciation expense $ 5,400

    Accumulated Depreciation-Building $ 5,400

    Rent receivable $ 600


    Rent earned $ 600

    Unearned rent $ 1,050


    Rent earned $ 1,050
    ($ 525 per month * 2 months)

    Answer 2
    Salaries payable $ 3,200
    Cash $ 3,200
    Cash $ 600
    Rent receivable $ 600

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