Problem 4-1

DATE DESCRIPTION P/ DEBIT CREDIT

R
2020
Dec. 31 A Interest Expense 9,333.33
Interest Payable 9,333.33
200,000 × 0.14 = 28,000 / 3 = 9,333.33

B Insurance Expense 12,500

Prepaid Insurance 12,500
90,000 / 36 = 2,500 × 5 = 12,500

C Rent Expense 15,000

Prepaid Rent 15,000
60,000 / 12 = 5,000 × 3 = 15,000

D Supplies Expense 1,300

Office Supplies 1,300
2,200 + 900 = 3,100 – 1,800 = 1,300

E Salaries Expense 24,000

Salaries Payable 24,000
40,000 / 5 = 8,000 × 3 = 24,000

F Depreciation Expense – Office Equipment 1,125

Accumulated
1,125

Depreciation –
Office
Equipment
Accumulated Depreciation – Office Equipment
40,000 / 10 × 3 / 12 = 1,125

G Doubtful Accounts Expense 12,000

Doubtful Accounts Allowance 12,000
400,000 × 0.03 = 12,000

Accounts Receivable 1,000

Doubtful Accounts Allowance 1,000

To normalize the
balance of
 allowance
for doubtful
accounts
To normalize the balance of doubtful accounts
allowance

Problem 4-2

DATE DESCRIPTION P/ DEBIT CREDIT

R
2020
Dec. 31 A Salary Expense 9,500
Salary Payable 9,500

B Rent Income 5,300

Unearned Revenue 5,300
6,800 – 1,500 = 5,300

C Prepaid Insurance 4,000

Insurance Expense 4,000
6,000 – 2,000 = 4,000

D Subscription Income 4,800

Unearned Subscription Income 4,800
9,800 – 5,000 = 4,800

E Interest Receivable 2,400

Interest Income 2,400

F Interest Expense 4,600

Interest Payable 4,600

G Interest Payable 326.67

Interest Expense 326.67
980 / 90 × 30 = 326.67

H Interest Income 404.44

Unearned Interest Income 404.44
1,400 / 45 × 13 = 404.44

I Store Supplies 4,350

Store Supplies Expense 4,350
6,600 – 2,250 = 4,350

J Cash 235,000
 Accounts Receivable 235,000
250,000 × 0.94 = 235,000

Depreciation
K 12,500

Expense –
Building 12,500
Accumulated
Depreciation –
Building
Depreciation
Expense –
Building 12,500
Accumulated
Depreciation –
Building
Depreciation Expense – Building
Accumulated Depreciation – Building 12,500
300,000 – 50,000 / 20 = 12,500