A) On July 1, Lopez Company paid $3,200 for six months of insurance coverage. No adjustments have been made to the Prepaid Insurance account, and it is now December 31.

b) Zim Company has a Supplies account balance of $9,000 at the beginning of the year. During the year, it purchased $4,000 of supplies. As of December 31, a physical count of supplies shows $1,800 of supplies available.

Required:

Prepare the journal entries to reflect the expiration of the insurance and correctly report the balance of the Supplies account and the Supplies Expense account as of December 31.

Question

Joslyn Small

Business

15 September, 05:15

A) On July 1, Lopez Company paid $3,200 for six months of insurance coverage. No adjustments have been made to the Prepaid Insurance account, and it is now December 31.

b) Zim Company has a Supplies account balance of $9,000 at the beginning of the year. During the year, it purchased $4,000 of supplies. As of December 31, a physical count of supplies shows $1,800 of supplies available.

Required:

Prepare the journal entries to reflect the expiration of the insurance and correctly report the balance of the Supplies account and the Supplies Expense account as of December 31.

+2

Answers (1)

Know the Answer?

Cullen Erickson · Answer 1

Below are the Journal entries for Lopez Company as of December 31.

Explanation:

a) Date: December 31

Debit: Insurance Expense $3,200

Credit: Prepaid Insurance $3,200

To record Insurance Expense.

b) Date: December 31

Debit: Supplies Expense $11,200

Credit: Supplies $11,200

To record Supplies Expense.

Supplies on December 31 can be calculated as follows:

Supplies = Opening Supplies + Purchases - Closing Supplies

Supplies = $9,000 + $4,000 - $1,800

Supplies = $11,200