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Unformatted text preview: sting entries were made in January, we need to
show that the asset (prepaid rent) has now been used and an expense has been incurred.
Journal entry: Debit to Rent Expense and Credit to Prepaid Rent
800 Feb 28 Rent Expense
Prepaid rent Cr.
800 B. Analysis: Office supplies were purchased in January for $150. Since no adjustments have been
made since that time, we need to recognize the amount of office supplies that have been "used
up", thus incurring and expense. Journal entry: Debit to Supplies Expense and Credit to Office
Supplies. Office Supplies
EB Feb 28 Supplies Expense
C. 25 Dr.
125 Analysis: Depreciation for property, plant and equipment is being charged evenly throughout
the two years. Since there is no salvage value, then estimated salvage value per month (over 2
years) would be $ 1500/24 months = $62.50 per month. No depreciation has been recorded for
January or February. For leasehold improvements, you estimate $3,000/24 months = $125.00
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- Spring '08
- Financial Accounting