Problem 3-1B Identifying adjusting entries with explanations P1 For each of the following journal entries 1 through 12, enter the letter of the explanation that most closely describes it in the space beside each entry. (You can use letters more than once.) A. To record payment of a prepaid expense. B. To record this period’s use of a prepaid expense. C. To record this period’s depreciation expense. D. To record receipt of unearned revenue. E. To record this period’s earning of prior unearned revenue. F. To record an accrued expense. G. To record payment of an accrued expense. H. To record an accrued revenue. I. To record receipt of accrued revenue. 1. Interest Receivable 3,500 Interest Revenue 3,500 2. Salaries Payable 9,000 Cash 9,000 3. Depreciation Expense 8,000 Accumulated Depreciation 8,000 4. Cash 9,000 Unearned Professional Fees 9,000 5. Insurance Expense 4,000 Prepaid Insurance 4,000 6. Interest Expense 5,000 Interest Payable 5,000 7. Cash 1,500 Accounts Receivable (from services) 1,500 8. Salaries Expense 7,000 Salaries Payable 7,000 9. Cash 1,000 Interest Receivable 1,000 10. Prepaid Rent 3,000 Cash 3,000 11. Rent Expense 7,500 Prepaid Rent 7,500 12. Unearned Professional Fees 6,000 Professional Fees Earned 6,000

Answer and Explanation:

The matching of the journal entries with the given transactions are as follows

A. 10. Prepaid Rent Dr 3,000

              To Cash 3,000

(Being the payment is made)

Increased the assets and decreased the assets

B. 11. Rent Expense 7,500

                 To Prepaid Rent 7,500

(Being prepaid expense is recorded)

Increased the expense and decreased the assets

C. 3. Depreciation Expense 8,000

               To Accumulated Depreciation 8,000

(Being the depreciation expense is recorded)

Increased the expense and decreased the assets

D.  4. Cash 9,000

              To Unearned Professional Fees 9,000

(Being the receipts is recorded)

Increased the assets and increased the liabilities

E. 12. Unearned Professional Fees 6,000

              To Professional Fees Earned 6,000

(Being the prior unearned revenue is recorded)

Decreased the liabilities and increased the revenue

F. 8. Salaries Expense 7,000

          To Salaries Payable 7,000

(Being the salaries expense is recorded)

Increased the expense and  increased the liabilities

G. 2. Salaries Payable 9,000

            To Cash 9,000

(Being the payment made is recorded)

Decreased the liabilities and decreased the assets

H. 1. Interest Receivable 3,500

         To  Interest Revenue 3,500

(Being the accrued revenue is recorded)

Increased the assets and increased the revenue

I. 9. Cash 1,000

           To Interest Receivable 1,000

(Being the receipt is recorded)

Increased the assets and decreased the assets

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