accounting 2,1

Module 02: Practice Problem 01 - Adjusting Entries |

In this exercise, you will complete a series of adjusting entries. You can use excel or you can write them on paper and scan them in or use Microsoft Word. If no entry is required, please indicate and explain why not.

Please NOTE: While I have listed a deadline for the practice problems, THIS IS NOT a hard deadline. It is encouraged that you stay on task and work these problems as you're reading the textbook, but if you don't understand them the first time, please redo them over and over until you have full understanding of the material.

Prepare all necessary adjusting journal entries in good form (debits and credits and account names) for the three months ending December 31, 2020.

Data to Enter:

Schmedley’s Extended Stay Hotel opened for business on October 1, 2020. At December 31, 2020, Schmedley’s trial balance (prior to any adjustments) revealed the following:

● The December 31 unadjusted balance of $440 in prepaid insurance represents a one-year premium that was paid on October 1.

● The December 31 unadjusted balance in supplies is $260. A physical count on December 31 shows $70 of supplies remaining.

● The December 31 unadjusted balance of unearned rent revenue was $460. Of this amount, $300 was earned during the three months ended December 31.

● Salaries of $27 were earned by employees in the last week of 2020; at December 31, Schmedley has neither recorded nor paid these salaries.

● There is no balance in accounts receivable at December 31. Rentals of $100 due from tenants on that date have not yet been recorded.

● There is a $6,000 balance in mortgage payable at December 31. The interest rate on the mortgage is 5% per year.

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