The following information for adjustments was available on December 31, 1990, the end of Tuft Company's annual
Question:
The following information for adjustments was available on December 31, 1990, the end of Tuft Company's annual accounting period.
a. The Store Supplies account had a \(\$ 150\) debit balance at the beginning of the year, \(\$ 675\) of supplies were purchased during the year, and an inventory of unused supplies at year-end totaled \(\$ 180\).
b. An examination of insurance policies showed three policies, as follows:
Prepaid Insurance was debited for the cost of each policy at the time of its purchase. Expired insurance was correctly recorded at the end of 1989 .
c. The company's two employees earn \(\$ 60\) per day and \(\$ 70\) per day, respectively. They are paid each Friday for a five-day workweek that begins on Monday. This year, December 31 fell on Wednesday, and the employees both worked on Monday, Tuesday, and Wednesday. The next payment for 5 days' work will be on January 2.
d. The company purchased a building on April 1, 1990. The building cost \(\$ 435,000\), has an estimated 25 -year life, and is not expected to have any salvage value at the end of that time.
\(e\). The company occupies most of the space in its building but it also rents space. One tenant rented a small amount of space on October 1 at \(\$ 500\) per month. The tenant paid the rent on the first day of October and November, and the amounts paid were credited to Rent Earned. However, the tenant did not pay the December rent until January 10, 1991, at which time he also paid the rent for January.
f. Another tenant agreed on November 1 to rent a small amount of space at \(\$ 540\) per month, and on that date paid three months' rent in advance. The receipt was credited to Unearned Rent.
\section*{Required}
1. Given the above information, journalize adjusting entries dated December 31, 1990, prior to the preparation of annual financial statements.
2. Prepare journal entries to record the January payments and receipts that involve amounts which were accrued on December 31.
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