Daniel Company started operations on January 1 of the current year. It is now December 31, the end of the current annual accounting period. The part-time bookkeeper needs your help to analyze the following three transactions:
- During the year, the company purchased office supplies that cost $3,500. At the end of the year, office supplies of $970 remained on hand.
- On January 1 of the current year, the company purchased a special machine for cash at a cost of $29,500. The machine's cost is estimated to depreciate at $2,950 per year.
- On July 1, the company paid cash of $1,480 for a two-year premium on an insurance policy on the machine; coverage began on July 1 of the current year.
Required:
Complete the following schedule with the amounts that should be reported for the current year.
Selected Balance Sheet Accounts at December 31 of the current year
Prepaid insurance (remaining coverage, $1,480 × 18/24 months) = 1,110
Selected Income Statement Accounts for the Current Year ended December 31
Office supplies expense (used, $3,500 − $970 on hand) = $2,530
Insurance expense (for 6 months, $1,480 × 6/24 months) = 370
