Answer:
Paid $8,400 rent in advance for a seven-month period.
Rent Account $8,400 (debit)
Profit and Loss $ 8,400 (credit)
An inventory of supplies at the end of June showed that items costing $5,960 were on hand.
Inventory $5,960 (debit)
Profit and Loss $ 5,960 (credit)
The firm bought equipment costing $72,900. The equipment has an expected useful life of 9 years and no salvage value.
<u>Purchase of Equipment</u>
Equipment $72,900 (debit)
Cash $72,900 (credit)
<u>Depreciation on Equipment</u>
Depreciation expense $ 675 (debit)
Accumulated for Depreciation $ 675 (credit)
Explanation:
Paid $8,400 rent in advance for a seven-month period.
Adjust the Rent Expense Account and the Profit and Loss Account
An inventory of supplies at the end of June showed that items costing $5,960 were on hand.
Recognise amounts to inventory and Post to Profit and Loss
The firm bought equipment costing $72,900. The equipment has an expected useful life of 9 years and no salvage value.
<u>Purchase of Equipment</u>
Equipment $72,900 (debit)
Cash $72,900 (credit)
<u>Depreciation on Equipment</u>
Depreciation expense $ 675 (debit)
Accumulated for Depreciation $ 675 (credit)
Depreciation = (Cost-Salvage Value)/Useful Life
=( $72,900 - 0) / 9
= $ 8100
June Depreciation = $ 8100×1/12
= $ 675
