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Arnez Co_Adjusting entries




Question;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 $3,900 balance. During 2013, the company purchased;supplies for $16,107, which was added to the Office Supplies account. The;inventory of supplies available at December 31, 2013, totaled $3,432.;b.;An analysis of the company's;insurance policies provided the following facts.;Policy;Date;of Purchase;Months;of Coverage;Cost;A;April;1, 2012;24;$;10,032;B;April;1, 2013;36;8,856;C;August;1, 2013;12;7,632;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 $2,450 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?s 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 $930,000 and is expected to have a $45,000 salvage;value at the end of its predicted 30-year life. Annual depreciation is;$29,500.;e.;Since the company is not large;enough to occupy the entire building it owns, it rented space to a tenant at;$2,900 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 $2,627 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 December 31, 2013.;Adjusting entries (all dated;December 31, 2013).


Paper#37272 | Written in 18-Jul-2015

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