For each of the following, journalize the necessary adjusting entry: (a) A business pays weekly salaries of $22,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the fiscal period, assuming that

Question

the fiscal period ends (1) on Tuesday, (2) on Wednesday. (b) The balance in the prepaid insurance account before adjustment at the end of the year is $18,000 . Journalize the adjusting entry required under each of the following alternatives: (1) the amount of insurance expired during the year is $5,300, (2) the amount of unexpired insurance applicable to a future period is $2,700. (c) On July 1 of the current year, a business pays $54,000 to the city for license taxes for the coming fiscal year. The same business is also required to pay an annual property tax at the end of the year. The estimated amount of the current year's property tax allocated to July is $4,800 . (1) Journalize the two adjusting entries required to bring the accounts affected by the taxes up to date as of July 31 . (2) What is the amount of tax expense for July? (d) The estimated depreciation on equipment for the year is $32,000.

Answer 1

(a) (1) Salary Expense ($22,000/5 × 2) 8,800
Salaries Payable 8,800

(2) Salary Expense ($22,000/5 × 3) 13,200
Salaries Payable 13,200

(b) (1) Insurance Expense 5,300
Prepaid Insurance 5,300

(2) Insurance Expense ($18,000 – $2,700) 15,300
Prepaid Insurance 15,300

(c) (1) Taxes Expense ($54,000/12) 4,500
Prepaid License Taxes 4,500

Taxes Expense 4,800
Property Taxes Payable 4,800

(2) $9,300 ($4,500 + $4,800)

(d) Depreciation Expense 32,000
Accumulated Depreciation—
Equipment 32,000