xercise 2-11 (Algo) Adjusting entries; fiscal year [LO2-6] The Mazzanti Wholesale Food Company's fiscal year-end is June 30. The company issues quarterly financial statements requiring the company to prepare adjusting entries at the end of each quarter. Assume all quarterly adjusting entries were properly recorded. On December 1, 2020, the company paid its annual fire insurance premium of $8,400 for the year beginning December 1 and debited prepaid insurance. On August 31, 2020, the company borrowed $137,500 from a local bank. The note requires principal and interest at 8% to be paid on August 31, 2021. Mazzanti owns a warehouse that it rents to another company. On January 1, 2021, Mazzanti collected $28,800 representing rent for the 2021 calendar year and credited deferred rent revenue. Depreciation on the office building is $21,000 for the fiscal year. Employee salaries for the month of June 2021 $21,000 will be paid on July 20, 2021. Prepare the necessary year-end adjusting entries at the end of June 30, 2021, for the above situations. (If no entry is requir

1. Dr Insurance expense 2,100

Cr Prepaid insurance2,100

2. Dr Interest expense 2,750

Cr Interest payable 2,750

3. Dr Deferred rent revenue 7,200

Cr Rent revenue 7,200

4. Dr Depreciation expense 5,250

Cr Accumulated depreciation-building 5,250

5. Dr Salaries and wages expense 21,000

Cr Salaries and wages payable 21,000

Explanation:

Preparation of Journal entries

1. Based on the information given we were told that the company paid for its yearly fire insurance premium of the amount of $8,400 which means that the Journal entry will be:

Dr Insurance expense 2,100

($8,400 × 3/12)

Cr Prepaid insurance2,100

2. Based on the information given we were told that the company borrowed the amount of $137,500 from a local bank that include a principal and interest at 8% which means that the Journal entry will be:

Dr Interest expense 2,750

($137,500 × 8% × 3/12)

Cr Interest payable 2,750

3. Based on the information given we were told that the company collected the amount of $28,800 which represent rent for the year 2021 which means that the Journal entry will be:

Dr Deferred rent revenue 7,200

($28,800 × 3/12)

Cr Rent revenue 7,200

4. Based on the information given we were told that Depreciation on the office building cost the amount of $21,000 which means that the Journal entry will be:

Dr Depreciation expense 5,250

($21,000 × 3/12)

Cr Accumulated depreciation-building 5,250

5. Based on the information given we were told that the company employee salaries for the month of June 2021 which is the amount of $21,000 will be paid on July 20, 2021 which means that the Journal entry will be:

Dr Salaries and wages expense 21,000

Cr Salaries and wages payable 21,000

c, theres a double tax on the business earnings