The Righter Shoe Store Company prepares monthly financial statements for its bank. The November 30 and December 31, 2016, trial balances contained the following account information:

Nov. 30 Dec. 31

Dr. Cr. Dr. Cr.

Supplies 3,100 4,600

Prepaid insurance 7,600 5,300

Salaries and wages payable 18,000 16,600

Deferred rent revenue 5,200 2,600

The following information also is known:

(a) The December income statement reported $3,600 in supplies expense.

(b) No insurance payments were recorded in December.

(c) $18,000 was paid to employees during December for salaries and wages.

(d) On November 1, 2016, a tenant paid Righter $7,800 in advance rent for the period November through January. Deferred rent revenue was credited.

Required:

(1) What was the cost of supplies purchased during December?

(2) What was the adjusting entry recorded at the end of December for prepaid insurance?

Question

Israel Cochran

Business

24 June, 21:38

The Righter Shoe Store Company prepares monthly financial statements for its bank. The November 30 and December 31, 2016, trial balances contained the following account information:

Nov. 30 Dec. 31

Dr. Cr. Dr. Cr.

Supplies 3,100 4,600

Prepaid insurance 7,600 5,300

Salaries and wages payable 18,000 16,600

Deferred rent revenue 5,200 2,600

The following information also is known:

(a) The December income statement reported $3,600 in supplies expense.

(b) No insurance payments were recorded in December.

(c) $18,000 was paid to employees during December for salaries and wages.

(d) On November 1, 2016, a tenant paid Righter $7,800 in advance rent for the period November through January. Deferred rent revenue was credited.

Required:

(1) What was the cost of supplies purchased during December?

(2) What was the adjusting entry recorded at the end of December for prepaid insurance?

+4

Answers (1)

Know the Answer?

Jacoby Durham · Answer 1

purchase of supplies 5,600

insurance expense 2,300 debit

prepaid insurance 2,300 credit

Explanation:

(1) What was the cost of supplies purchased during December?

invneotry identity:

beginning supplies + purchase = ending supplies + expense

the left side are the input. The supplies could come from previous prior or be pruchase.

The right side the outputit could be consumer or kept at stock

3,100 + p = 4,600 + 3,600

purchase = 4,600 + 3,600 - 3,100 = 5,100

(2) What was the adjusting entry recorded at the end of December for prepaid insurance?

beginning insurance 7,600

ending insurance (5,300)

adjustment: 2,300

there was insurance expired for the value of 2,300