Transaction Analysis and Adjustments

Selected accounts of Ideal Properties Inc., a real estate management firm, are shown below as of January 31, before any adjustments have been made:

	Unadjusted
Account	Balances
Prepaid insurance	$19,980
Supplies	5,790
Office equipment	17,856
Unearned rent revenue	15,750
Salaries expense	9,300
Rent revenue	45,000

Monthly financial statements are prepared. Using the Transaction Analysis Template, determine the financial statement effect of the following adjustments as of January 31: a. Prepaid Insurance represents a threeyear premium paid on January 1. b. Supplies of $2,550 were on hand January 31. c. Office equipment is expected to last eight years. Depreciation is recorded monthly. d. On January 1, the firm collected six months rent in advance from a tenant renting space for $2,625 per month. e. Accrued salaries not recorded as of January 31 are $1,470. Note: Use negative signs with answers, when appropriate.

	Balance Sheet								Income Statement
Transaction	Assets	=	Liabilities	+	Stockholders' Equity				Revenues	-	Expenses	=	Net Income
a. Adjustment for prepaid insurance.									Answer		Answer		Answer
b. Adjustment for supplies									Answer		Answer		Answer
c. Adjustment for office equipment.									Answer		Answer		Answer
d. Adjustment for rent collected in advance.									Answer		Answer		Answer
e. Adjustment for accrued salaries.									Answer		Answer		Answer