Dion Lte is making adjusting entries for the year ended December 31, 2012. In developing information for

Dion Ltée is making adjusting entries for the year ended December 31, 2012. In developing information for the adjusting entries, the accountant learned the following:

a. Paid a one-year insurance premium of \(\$ 3,000\) on September 1, 2012, for coverage beginning on that date.

b. At December 31, 2012, obtained the following data relating to shipping supplies. The company uses a large amount of shipping supplies that are purchased in volume, stored, and used as needed.

Required:
1. What amount should be reported on the 2012 income statement for insurance expense? for shipping supplies expense?
2. What amount should be reported on the December 31, 2012, statement of financial position for prepaid insurance? for shipping supplies inventory?
3. Using the process illustrated in the chapter, record the adjusting entry for insurance at December 31, 2012, assuming that the bookkeeper debited the full amount paid on September 1, 2012 , to prepaid insurance.
4. Using the process illustrated in the chapter, record the adjusting entry for shipping supplies at December 31, 2012, assuming that the purchases of shipping supplies were debited in full to shipping supplies inventory.

Transcribed Image Text:

Shipping supplies on hand, January 1, 2012 Purchases of shipping supplies during 2012 Shipping supplies on hand, per inventory December 31, 2012 $14,000 72,000 11,000