Question

The December 31, 2021, unadjusted trial balance for Demon Deacons Corporation is presented below.

Accounts Debit Credit
Cash $8,800
Accounts Receivable 13,800
Prepaid Rent 5,760
Supplies 2,800
Deferred Revenue $1,800
Common Stock 10,000
Retained Earnings 4,800
Service Revenue 43,560
Salaries Expense 29,000
$60,160 $60,160

At year-end, the following additional information is available:

a. The balance of Prepaid Rent, $5,760, represents payment on October 31, 2021, for rent from November 1, 2021, to April 30, 2022.
b. The balance of Deferred Revenue, $1,800, represents payment in advance from a customer. By the end of the year, $450 of the services have been provided.
c. An additional $600 in salaries is owed to employees at the end of the year but will not be paid until January 4, 2022.
d. The balance of Supplies, $2,800, represents the amount of office supplies on hand at the beginning of the year of $1,100 plus an additional $1,700 purchased throughout 2021. By the end of 2021, only $680 of supplies remains.

Required:
Update account balances for the year-end information by recording any necessary adjusting entries.

Answer 1

Answer and Explanation:

The Journal entry is shown below:-

1. Rent expense Dr, $1,920 ($5,760 × 2 ÷ 6)

To Prepaid rent $1,920

(Being rent expense is recorded)

2. Unearned revenue Dr, $450

To Service revenue $450

(Being service revenue is recorded)

3. Salary expense Dr, $600

To Salary payable $600

(Being salary expense is recorded)

4. Supplies expense Dr, $2,120 ($1,100 + $1,700 - $680)

To Supplies $2,120

(Being supplies expense is recorded)