Prepare the necessary adjusting entries at December 31, 2018, for the Microchip
ID: 2333453 • Letter: P
Question
Prepare the necessary adjusting entries at December 31, 2018, for the Microchip Company for each of the following situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded.
1.On October 1, 2018, Microchip lent $90,000 to another company. A note was signed with principal and 6% interest to be paid on September 30, 2019.
2.On November 1, 2018, the company paid its landlord $9,300 representing rent for the months of November through January. Prepaid rent was debited.
3.On August 1, 2018, collected $15,300 in advance rent from another company that is renting a portion of Microchip’s factory. The $15,300 represents one year’s rent and the entire amount was credited to rent revenue.
4.Depreciation on office equipment is $5,600 for the year.
5.Vacation pay for the year that had been earned by employees but not paid to them or recorded is $9,100. The company records vacation pay as salaries expense.
6.Microchip began the year with $3,100 in its asset account, supplies. During the year, $7,600 in supplies were purchased and debited to supplies. At year-end, supplies costing $3,800 remain on hand.
Required: 2-a. If Microchip’s accountant employed reversing entries for prepaid expenses, prepare the original transactions creating the prepayments for only those entries that would be reversed.
2-b. If Microchip’s accountant employed reversing entries for prepaid expenses, prepare the adjusting entries at the end of 2018 for only those entries that would be reversed.
3. Prepare the appropriate reversing entries at the beginning of 2019
If no entry is required for a transaction/event, select "No journal entry required" in the first account field, and i want to know why it is no journal entry required or required. detail please
Explanation / Answer
Please find below the required journal entries.
In case of any doubt. Do ask.
Thanks and regards
General Journal Date Account Titles And Explanation Ref. Dr Cr 31st December, 2018 Interest Receivable [$90,000 * 6% * 3/12] 1350 Interest Revenue 1350 (Being record of the interest to be received on money lent) 31st December, 2018 Rent Expense [$7,800 * 2/3] 6200 To Prepaid rent 6200 (Being record of the rent expense for the year) 31st December, 2018 Rent Revenue [$ 13,800 * 7/12] 8925 To Unearned Rent Revenue 8925 (Being record of the rental revenue earned during the year) 31st December, 2018 Depreciation Expense 5,600 To Accumulated Depreciation - Machinery 5,600 (Being record of the accrual of salary expense) 31st December, 2018 Salaries Expense 9,100 To Salaries expense payable 9,100 (Being record of the accrual of salary expene) 31st December, 2018 Supplies expense [$3,100 + $7,600-$3,800] 6900 To Supplies 6900 (Being record of the ussage of supplies during the year)