Reference no: EM132629388
Problem 1 - Below are transactions for XYZ Company during 2021.
1. On Dec 1, 2021, XYZ Company receives $4000 cash from a company that is renting office space from XYZ. The payment representing rent for December and January, is credited to Deferred Revenue.
2. XYZ Company purchases a one-year property insurance policy on July 1, 2021, for $13,200. The payment is debited to Prepaid Insurance for the entire amount.
3. Employee salaries of $3000 for the month of December will be paid in early January 2022.
4. On November 1, 2021, the company borrows $15,000 from a bank. The loan requires principal and interest at 10% to be paid on October 30, 2022.
5. Office supplies at the beginning of 2021 total $1,000. On August 15, ZYZ Company purchases an additional $3,400 of office supplies, debiting the Supplies account. By the end of the year, $500 of office supplies remains.
REQUIRED: Record the necessary adjusting entries at December 31, 2021, for XYZ Company. You do not need to record transactions made during the year. Assume that no financial statements were prepared during the year and no adjusting entries were recorded.
Problem 2 - Below are transactions for ABC Company during 2021.
1. On October 1, 2012, ABC Company lends $9,000 to another company. The other company signs a note indicating principal and 12% interest will be paid to ABC Company on September 30, 2022.
2. On November 1, 2021, ABC Company pays its landlord $4,500 representing rent for the months of November through January. The payment is debited to Prepaid Rent for the entire amount.
3. On August 1, 2021, ABC Company collects $13,200 in advance from another company that is renting a portion of ABC's factory. The $13,200 represents one year's rent and the entire amount is credited to Deferred Revenue.
4. Depreciation on machinery is $5,500 for the year.
5. Salaries for the year earned by employees but not paid to them or recorded are $5,000.
6. ABC Company begins the year with $1,500 in supplies. During the year, the company purchases $5,500 in supplies and debits that amount to Supplies. At year-end, supplies costing $3,500 remain on hand.
REQUIRED: Record the necessary adjusting entries at December 31, 2021, for ABC Company. Assume that no financial statements were prepared during the year and no adjusting entries were recorded.