Folton Truck Rentals Company faced the following situations. Requirement 1. Jour
ID: 2561820 • Letter: F
Question
Folton Truck Rentals Company faced the following situations. Requirement 1. Journalize the adjusting entry needed at December 31, 2014, for each situation. Consider each fact separately. (Record debits first, then credits. Exclude explanations from any journal entries.) a. The business has interest expense of $3,500 that it must pay early in January 2015. a. The business has interest expense of $3,500 that it must pay early in January 2015. b. Interest revenue of 4,800 has been earned but not yet received. c. On July 1, 2014, when the business collected 12,600 rent in advance, it debited Cash and credited Unearned Rent Revenue. The tenant was paying for two years' rent. d. Salary expense is 5,500 per daylong dash—Monday through Friday long dash—and the business pays employees each Friday. For the purpose of this calculation, assume December 31 falls on a Thursday. e. The unadjusted balance of the Supplies account is $3,500. The total cost of supplies on hand is $ 1 comma 400. $1,400. f. Equipment was purchased at the beginning of this year at a cost of $200,000. The equipment's useful life is five years. There is no residual value. Record depreciation for this year and then determine the equipment's book value.
Explanation / Answer
Journal Entries on 31st December 2014 Debit Credit Interest Expense $ 3,500 Interest Payable $ 3,500 (being Interest outstanding) Interest Receivable $ 4,800 Interest Income $ 4,800 (being interest earned but not received) Unearned Rent Revenue $ 3,150 Rent Revenue $ 3,150 (being 2 years advance rent adjusted) Salary Expense $ 27,500 Salary Payable $ 27,500 (being Salary for one week accrued) Supplies expense $ 2,100 supplies in hand $ 2,100 (being supplies expense booked) Depreciation $ 40,000 Accumulated Depreciation on Equipment $ 40,000 (being depreciation expense booked) Book value of equipment is Purchase value Less Accumulated Depreciation $200000-$40000 $ 160,000