Exercise 2–9 1. Interest receivable ($90,000 x 8% x 3/12)....................... Interest revenue ..................................................... 2. Rent expense ($6,000 x 2/3) .......................................... Prepaid rent............................................................ 3. Rent revenue ($12,000 x 7/12) ....................................... Unearned rent revenue .......................................... 4. Depreciation expense ................................................ Accumulated depreciation ..................................... 5. Salaries expense ....................................................... Salaries payable ..................................................... 6. Supplies expense ($2,000 + 6,500 – 3,250) .................... Supplies ................................................................. 1,800 4,000 7,000 4,500 8,000 5,250 1,800 4,000 7,000 4,500 8,000 5,250 Exercise 2–10 1. $7,200 represents nine months of interest on a $120,000 note, or 75% of annual interest. $7,200 ÷ .75 = $9,600 in annual interest $9,600 ÷ $120,000 = 8% interest rate Or, $7,200 ÷ $120,000 = .06 nine-month rate To annualize the nine month rate: .06 x 12/9 = .08 or 8% 2. $60,000 ÷ 12 months = $5,000 per month in rent $35,000 ÷ $5,000 = 7 months expired. The rent was paid on June 1, seven months ago. 3. $500 represents two months (November and December) in accrued interest, or $250 per month. $250 x 12 months = $3,000 in annual interest Principal x 6% = $3,000 Principal = $3,000 ÷ .06 = $50,000 note 2– Solutions Manual, Vol.1, Chapter 2 21