[dmswnsgh]

1. Below is an unadjusted trial balance for Acme Machine Tool Company as of December 31, 2011.
Account Title Debit Credit
Cash 161,500
Accounts Receivable 45,000
Prepaid Insurance 4,500
Prepaid Rent 6,000
Inventory 26,000
Shop Supplies 12,000
Note Receivable 20,000
Equipment 20,000
Accumulated Depreciation 5,500
Accounts Payable 42,000
Salaries Payable 0
Note Payable 80,000
Common Stock 100,000
Retained Earnings 0
Sales Revenue 651,500
Cost of Goods Sold 122,000
Salaries Expense 299,000
Rent Expense 66,000
Insurance Expense 49,500
Utilities Expense 42,000
Depreciation Expense 5,500
Totals 879,000 879,000

The Acme Machine Tool Company needs to prepare financial statements at the end of December, 2011 for presentation to its bank. Acme Machine Tool began operation on January 1, 2011 and is completing their first full year of operations.

You have just acquired Acme Machine Tool as a new client for your CPA firm. The owner told you about the following events that have occurred:
a. Acme Machine Tool pays the rent for the entire year on January 1 of each year. The rent is currently $72,000 per year.
b. Monthly depreciation on the equipment is $500. No depreciation has been recorded for December.
c. Acme Machine Tool purchased a business insurance policy at the beginning of 2011 when they began business. The premium was $54,000. The insurance premium was correctly recorded in the Prepaid Insurance account when it was purchased at the beginning of 2011. No entry has been made to record the insurance expense for December.
d. The owner just purchased a business insurance policy for the upcoming year. The policy will begin on January 1, 2012 and ends on December 31, 2012. The premium for the policy is $60,000. The owner wrote a check to the insurance company and gave it to his broker on December 18, 2011. The owner has not recorded the check payment in his accounting records yet because he does not want to recognize such a huge expense at the end of his first year in business – he is afraid it will hurt his profits and make his business less desirable to the bank.
e. Acme Machine Tool has three employees. They are paid bi-weekly every other Friday. The most recent paycheck was on Friday, December 23 for the pay period ending December 17. The next payday will be on Friday, January 6, 2012. No entry has been made to record the payroll expense for December 18 through December 31. The pay due to the employees for this period is $12,458.

[dmswnsgh]

Let me make some changes on the unadjusted trial balance since debits and credits are not clear.
I will put (D) after the amount debited and (C) after the amount credited just in case.

  Account Title 	   Debit	Credit
Cash	                  161,500(D)	
Accounts Receivable	   45,000(D)	
Prepaid Insurance	    4,500(D)	
Prepaid Rent	            6,000(D)	
Inventory	           26,000(D)	
Shop Supplies	           12,000(D)	
Note Receivable        	   20,000(D)	
Equipment	           20,000(D)	
Accumulated Depreciation		5,500(C)
Accounts Payable		       42,000(C)
Salaries Payable		            0(C)
Note Payable		               80,000(C)
Common Stock		              100,000(C)
Retained Earnings		            0(C)
Sales Revenue		              651,500(C)
Cost of Goods Sold	  122,000(D)	
Salaries Expense	  299,000(D)	
Rent Expense	           66,000(D)	
Insurance Expense	   49,500(D)	
Utilities Expense	   42,000(D)	
Depreciation Expense	    5,500(D)	
Totals                 	  879,000     879,000

[pready]

A. You need more information like was the payment recorded as a Prepaid Rent or was it recorded as an Expense. If it was recorded as prepaid Rent you need to do an adjusting entry to transfer the amount of rent from the Prepaid amount to the expense account.

B. The amount is given to you and all you need to do is record depreciation expense for one month.

C. This is similar to A, except you know the amount was recorded as a Prepaid so you have to transfer the amount to the expense account.

D. You just need to journalize the transaction to the PrePaid account.

E. The amount is given to you so you just need to record the salaries expense.

[dmswnsgh]

Given your explanation, I made adjusting entries. Can you check if it is correct?

Date	Account Description	       Debit	 Credit
Dec. 31	Rent expense                   6,000 
           Prepaid rent	                         6,000

     31 Depr. expense on equipment       500
           Accum. Depr. on equipment	           500
   
     31 Insurance expense	       4,500
                    Prepaid Insurance	         4,500
	
     31	Prepaid insurance for 2011    60,000 
                    Cash	                60,000
	
     31 Salaries Expense              12,458
                  Salaries Payable	        12,458

[pready]

You got it, everything looks looks good.

[dmswnsgh]

Thank you so much for helpming me out!
I hope you have a wonderful day! :)

[dmswnsgh]

Thank you so much for helpming me out!
I hope you have a wonderful day!