The Righter Shoe Store Company prepares monthly financial statements for its bank. The November 30 and December 31, 2013, trial balances contained the following account information:

The Righter Shoe Store Company prepares monthly financial statements for its bank. The November 30 and December 31, 2013, trial balances contained the following account information:

  

	Nov. 30		Dec. 31
	Dr.	Cr.	Dr.	Cr.
Supplies	1,500		3,000
Prepaid insurance	6,000		4,500
Wages payable		10,000		15,000
Unearned rent revenue		2,000		1,000

  

The following information also is known:
a.	The December income statement reported $2,000 in supplies expense.
b.	No insurance payments were made in December.
c.	$10,000 was paid to employees during December for wages.
d.	On November 1, 2013, a tenant paid Righter $3,000 in advance rent for the period November through January. Unearned rent revenue was credited.

 

Explanation: 1. Cost of supplies purchased = $3,000 + 2,000 – 1,500 = $3,500   2. Insurance expense for December = $6,000 – 4,500 = $1,500   4. Rent revenue recognized each month = $3,000 × 1/3 = $1,000