Lawson Delivery Initially Records All Prepaid Expenses as Expenses and All

question 132

Essay

Lawson Delivery initially records all prepaid expenses as expenses and all unearned revenues as revenues. Given the following information, prepare the necessary adjusting entries at year end, December 31, 2019.
a)On January 3, 2019, $3,500 of supplies were purchased. A count revealed $700 still on hand at December 31, 2019.
b)On January 4, 2019, a $3,150 payment was made to an insurance agency for two and a half years of insurance.
c)On June 30, 2019, received nine months' rent in advance from a tenant, $8,100.
d)On August 1, 2019, received six months' rent in advance from a tenant, $4,800.

---

Definitions:

Fixed Assets

Physical assets with a long lifespan that serve operational purposes in a business and aren't likely to be sold or used up within a year.

Stockholders

Individuals or entities that own shares in a corporation, thus holding partial ownership of the company.

Current Assets

Refers to assets that a company expects to convert into cash within one year or one business cycle, whichever is longer.

Net Fixed Assets

The value of a company’s fixed assets minus any accumulated depreciation, representing the actual value of the company's fixed assets.