Response:
Natsu Company
1. Journal Adjustments as of October 31:
a. Expense for Supplies $54,370
Inventory for Supplies $54,370
This entry records the expenses incurred for supplies throughout the period.
b. Expense for Insurance $4,730
Prepaid Insurance $4,730
This entry captures the insurance expenses for the period in question.
c. Wages Expense $5,000
Wages Payable $5,000
This entry is to acknowledge the wages that have not been paid for the period.
d. Depreciation on Building $5,400
Accumulated Depreciation $5,400
This reflects depreciation expense for the current year.
e. Rent Receivable $1,000
Rent Revenue $1,000
This entry documents the revenue from rent for the month.
f. Unearned Rent $1,450
Rent Revenue $1,450
This entry is for recognizing rent revenue for two months.
2. General Journal Entries for cash transactions in November 2017 relating to c and e:
c:
Date General Journal Debit Credit
Nov. 7 Salaries Payable $5,000
Cash Account $5,000
This reflects the disbursement of wages for the final week of October.
e:
Date General Journal Debit Credit
Nov. 15 Cash Account $2,000
Rent Revenue $1,000
Rent Receivable 1,000
This entry captures the collection of rent for both October and November.
Clarification:
a) Data and Calculations:
1. Supplies
Beginning Balance $600
Purchases 54,570
Supplies Expense 54,370*
Ending Balance $800
2. Policy Purchase Date Months of Cost
Coverage
A April 1, 2016 24 $6,000
B April 1, 2017 36 7,200
C August 1, 2017 12 1,320
3. Insurance Expense for 2017:
Policy A Nov 2016 to October 2017 $3,000 ($6,000 *12/24)
Policy B April 2017 to October 2017 $1,400 ($7,200 * 7/36)
Policy C Aug. 1 2017 to October 2017 $330 ($1,320 * 3/12)
Total Insurance Expense = $4,730
