0.83 points eBookPrintReferences Check my work Check My Work button is now enabledItem 2Item 2 0.83 points A company has a fiscal year-end of December 31: (1) on October 1, $29,000 was paid for a one-year fire insurance policy; (2) on June 30 the company advanced its chief financial officer $27,000; principal and interest at 5% on the note are due in one year; and (3) equipment costing $77,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $15,400 per year. Prepare the necessary adjusting entries at December 31 for each of the above items. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Dr Insurance expense7,250

Cr Prepaid insurance7,250

2. Dr Interest receivable 675

Cr Interest revenue 675

3. Dr Depreciation expense15,400

Cr Accumulated depreciation15,400

Explanation:

Preparation of Journal entry

1. Based on the information given we were told that the amount of $29,000 was been paid for a one year fire insurance policy which means that the Journal entry will be :

Dr Insurance expense7,250

Cr Prepaid insurance7,250

($29,000 × 3/12 = $7,250)

2. Based on the information given we were told the company gave advanced to its chief financial officer for the amount of $27,000 which as well include principal and interest at 5% which means that the Journal entry will be :

Dr Interest receivable 675

Cr Interest revenue 675

($27,000 × 5% × 6/12 = $675)

3. Based on the information given we were told that the Depreciation on the equipment is the amount of $15,400 per year which means that the Journal entry will be :

Dr Depreciation expense15,400

Cr Accumulated depreciation15,400