Answer to Question #209095 in Accounting for Jhonelle

Question

Shelly Ryce was employed at Tele Company for 10 years. In recent times, Shelly was made redundant & as a part of her redundancy payment package, she received $2,000,000. Shelly has always loved wearing hair extensions, & realizing how lucrative the hair business. She decided to start a hair supplies store, called “Shelly Hair.” Shelly started operations on May 1, 2021.

The following transactions:

May 1 Miss Ryce paid a cheque for the first month’s rent for the store, along with an

equal amount for a deposit of $30,000 to Mr. Steve Johnson.

May 18 Miss Ryce paid her cashier a cheque of $15,000 for her fortnightly salary.

a. Journalize & post adjusting entries, using the following information:

• The cashier complained that she was short-paid $2,500. Investigations revealed that she was in fact short-paid for the month of May 2021.
• The insurance for "Shelly Hair" was due & payable by May 1. The annual premium is $72,000 & the expense is incurred on a pro-rata basis.

Answer 1

May 1 Dr Rent $30,000

Dr Prepaid Rent $30,000

Cr Bank $60,000

May 18 Dr Salaries $15,000

Cr Bank $15,000

May 18 Dr salaries $2,500

Cr Underpaid rent payable $2,500

May 30 Dr insurance expense $6,000

Cr Insurance premium payable $6,000