Latta Company is making adjusting entries for the year ended December 31, 2011. In developing information for

Question:

Latta Company is making adjusting entries for the year ended December 31, 2011. In developing information for the adjusting entries, the accountant learned the following:
a. A two-year insurance premium of $3,600 was paid on September 1, 2011, for coverage beginning on that date.
b. At December 31, 2011, the following data relating to Shipping Supplies were obtained from the records and supporting documents.
Shipping supplies on hand, January 1, 2011 .......... $ 9,000
Purchases of shipping supplies during 2011 .......... 60,000
Shipping supplies on hand, counted on December 31, 2011 ... 20,000

Required:
1. Using the process illustrated in the chapter, record the adjusting entry for insurance at December 31, 2011, assuming that the premium was paid on September 1, 2011, and the bookkeeper debited the full amount to Prepaid Insurance.
2. Using the process illustrated in the chapter, record the adjusting entry for supplies at December 31, 2011, assuming that the purchases of shipping supplies were debited in full to Shipping Supplies.
3. What amount should be reported on the 2011 income statement for Insurance Expense? For Shipping Supplies Expense?
4. What amount should be reported on the December 31, 2011, for Prepaid Insurance? For Shipping Supplies?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...