Page $134$

Problem $3-2$A Preparing adjusting and subsequent journal entries $\sqrt[\phantom{2}]{P1}$ P$2$ P$3$ P$4$

Arnez Company's annual accounting period ends on December $31.$ The following information concerns the adjusting entries to be recorded as of that date. Entries can draw from the following partial chart of accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Building; Accumulated Depreciation$-$Building; Salaries Payable; Unearned Revenue; Rent Revenue; Salaries Expense; Office Supplies Expense; Insurance Expense; and Depreciation Expense$-$Building.

a$.$ The Office Supplies account started the year with a $$4,000$ balance. During the year, the company purchased supplies for $$13,400,$ which was added to the Office Supplies account. The inventory of supplies available at December $31$ totaled $$2,554.$

b$.$ The Prepaid Insurance account had a $$20,000$ debit balance at December $31$ before adjusting for the costs of any expired coverage for the year. An analysis of prepaid insurance shows that $$12,880$ of ufiexpired insurance coverage remains at year$-$end.

c$.$ The company has $15$ employees, who earn a total of $$1,960$ in salaries each working day. They are paid each Monday for their work in the five$-$day workweek ending on the previous Friday. Assume that December $31$ is a Tuesday, and all $15$ employees worked the first two days of that week. Because New Year's Day is a paid holiday, they will be paid salaries for five full days on Monday, January $6$ of next year.

d$.$ The company purchased a building at the beginning of this year. It cost $$960,000$ and is expected to have a $$45,000$ salvage value at the end of its predicted $30-$year life. Annual depreciation is $$30,500.$

e$.$ Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at $$3,000$ per month, starting on November $1.$ The rent was paid on time on November $1,$ and the amount received was credited to Rent Revenue. However, the tenant has not paid the December rent. The company has worked out an agreement with the tenant, who has promised to pay both December and January rent in full on January $31.$

f$.$ On November $1,$ the company rented space to another tenant for $$2,800$ per month. The tenant paid five months' rent in advance on that date. The payment was recorded with a credit to the Unearned Revenue account.