HBS CORE - FINANCIAL ACCOUNTING -
ADJUSTING JOURNAL ENTRIES WITH
COMPLETE SOLUTIONS
AJEs 1–180: Complete Solutions
1–30: Prepaid Expenses (Asset method)
1. Paid 1,200for12monthsofinsuranceonJan1.AJEonJan31.∗DrInsuranceExpense10
0/CrPrepaidInsurance100∗(1,200for12monthsofinsuranceonJan1.AJEonJan31.∗DrI
nsuranceExpense100/CrPrepaidInsurance100∗(1,200 ÷ 12 = 100/month)
2. Paid 6,000for6monthsofrentonMar1.AJEonMar31.∗DrRentExpense1,000/CrPre
paidRent1,000∗(6,000for6monthsofrentonMar1.AJEonMar31.∗DrRentExpense1,00
0/CrPrepaidRent1,000∗(6,000 ÷ 6 = 1,000/month; 1 month used)
3. Paid 3,600for12monthsofsoftwarelicenseonApr1.AJEonDec31.∗DrSoftwareExpe
nse2,700/CrPrepaidSoftware2,700∗(3,600for12monthsofsoftwarelicenseonApr1.A
JEonDec31.∗DrSoftwareExpense2,700/CrPrepaidSoftware2,700∗(3,600 ÷ 12 =
300/month × 9 months = 2,700)
4. Paid 24,000for2yearsofmaintenanceonJuly1,Year1.AJEonDec31,Year1.∗DrMaint
enanceExpense6,000/CrPrepaidMaintenance6,000∗(24,000for2yearsofmaintenan
ceonJuly1,Year1.AJEonDec31,Year1.∗DrMaintenanceExpense6,000/CrPrepaidMain
tenance6,000∗(24,000 ÷ 24 = 1,000/month × 6 months = 6,000)
5. Paid 900for3monthsofadvertisingonSep1.AJEonSep30.∗DrAdvertisingExpense30
0/CrPrepaidAdvertising300∗(900for3monthsofadvertisingonSep1.AJEonSep30.∗Dr
AdvertisingExpense300/CrPrepaidAdvertising300∗(900 ÷ 3 = 300/month)
6. Paid $15,000 for 5 months of consulting fees prepaid on Oct 1. AJE on Oct 31.
*Dr Consulting Expense 3,000 / Cr Prepaid Consulting 3,000*
,7. Paid 7,200for12monthsofpropertytaxonNov1.AJEonDec31.∗DrPropertyTaxExpe
nse1,200/CrPrepaidPropertyTax1,200∗(7,200for12monthsofpropertytaxonNov1.AJ
EonDec31.∗DrPropertyTaxExpense1,200/CrPrepaidPropertyTax1,200∗(7,200 ÷ 12 =
600/month × 2 months = 1,200)
8. Paid 4,800for4monthsofequipmentrentalonFeb1.AJEonMar31.∗DrRentalExpens
e2,400/CrPrepaidRent2,400∗(2monthsused:Feb,Mar→4,800for4monthsofequipm
entrentalonFeb1.AJEonMar31.∗DrRentalExpense2,400/CrPrepaidRent2,400∗(2mo
nthsused:Feb,Mar→1,200 × 2 = 2,400)
9. Paid $10,000 for 10 months of security services on May 1. AJE on May 31.
*Dr Security Expense 1,000 / Cr Prepaid Security 1,000*
10. Paid 2,400for12monthsofwebsitehostingonAug1.AJEonDec31.∗DrHostingExpe
nse1,000/CrPrepaidHosting1,000∗(2,400for12monthsofwebsitehostingonAug1.AJE
onDec31.∗DrHostingExpense1,000/CrPrepaidHosting1,000∗(200/month × 5
months = 1,000)
11. Paid 18,000for18monthsofinsuranceonJan1,Year1.AJEonDec31,Year1.∗DrInsur
anceExpense12,000/CrPrepaidInsurance12,000∗(18,000for18monthsofinsuranceo
nJan1,Year1.AJEonDec31,Year1.∗DrInsuranceExpense12,000/CrPrepaidInsurance1
2,000∗(1,000/month × 12 months = 12,000)
12. Paid 500for5monthsofnewspapersubscriptiononMar1.AJEonApr30.∗DrSubscri
ptionExpense200/CrPrepaidSubscription200∗(2monthsused:Mar,Apr→500for5mo
nthsofnewspapersubscriptiononMar1.AJEonApr30.∗DrSubscriptionExpense200/Cr
PrepaidSubscription200∗(2monthsused:Mar,Apr→100 × 2 = 200)
13. Paid 3,000for6monthsofjanitorialservicesonSep1.AJEonNov30.∗DrJanitorialExp
ense1,500/CrPrepaidJanitorial1,500∗(3,000for6monthsofjanitorialservicesonSep1.
AJEonNov30.∗DrJanitorialExpense1,500/CrPrepaidJanitorial1,500∗(500/month × 3
months = 1,500)
14. Paid 12,000for12monthsofgymmembershipforemployeesonOct1.AJEonDec31.
∗DrEmployeeBenefitsExpense3,000/CrPrepaidBenefits3,000∗(12,000for12months
ofgymmembershipforemployeesonOct1.AJEonDec31.∗DrEmployeeBenefitsExpense
3,000/CrPrepaidBenefits3,000∗(1,000/month × 3 months = 3,000)
, 15. Paid 7,500for15monthsoflegalretaineronApr1.AJEonSep30.∗DrLegalExpense3,
000/CrPrepaidLegal3,000∗(7,500for15monthsoflegalretaineronApr1.AJEonSep30.∗
DrLegalExpense3,000/CrPrepaidLegal3,000∗(500/month × 6 months = 3,000)
16. Paid 2,000for4monthsofofficecleaningonNov1.AJEonDec31.∗DrCleaningExpens
e1,000/CrPrepaidCleaning1,000∗(2,000for4monthsofofficecleaningonNov1.AJEon
Dec31.∗DrCleaningExpense1,000/CrPrepaidCleaning1,000∗(500/month × 2
months = 1,000)
17. Paid 9,600for8monthsofcloudstorageonJan1.AJEonMar31.∗DrCloudExpense3,
600/CrPrepaidCloud3,600∗(9,600for8monthsofcloudstorageonJan1.AJEonMar31.∗
DrCloudExpense3,600/CrPrepaidCloud3,600∗(1,200/month × 3 months = 3,600)
18. Paid 14,400for12monthsoftrainingprogramonMar1.AJEonDec31.∗DrTrainingEx
pense12,000/CrPrepaidTraining12,000∗(14,400for12monthsoftrainingprogramon
Mar1.AJEonDec31.∗DrTrainingExpense12,000/CrPrepaidTraining12,000∗(1,200/m
onth × 10 months = 12,000)
19. Paid 5,000for5monthsofwastedisposalonJun1.AJEonAug31.∗DrWasteExpense3
,000/CrPrepaidWaste3,000∗(5,000for5monthsofwastedisposalonJun1.AJEonAug31
.∗DrWasteExpense3,000/CrPrepaidWaste3,000∗(1,000/month × 3 months =
3,000)
20. Paid 36,000for3yearsofliabilityinsuranceonJan1,Year1.AJEonDec31,Year1.∗DrIn
suranceExpense12,000/CrPrepaidInsurance12,000∗(36,000for3yearsofliabilityinsu
ranceonJan1,Year1.AJEonDec31,Year1.∗DrInsuranceExpense12,000/CrPrepaidInsur
ance12,000∗(36,000 ÷ 36 = 1,000/month × 12 months = 12,000)
21. Paid 1,800for6monthsofinternetonOct1.AJEonDec31.∗DrInternetExpense900/
CrPrepaidInternet900∗(1,800for6monthsofinternetonOct1.AJEonDec31.∗DrInterne
tExpense900/CrPrepaidInternet900∗(300/month × 3 months = 900)
22. Paid 8,000for8monthsofmarketingconsultingonFeb1.AJEonApr30.∗DrMarketin
gExpense3,000/CrPrepaidMarketing3,000∗(3months:Feb,Mar,Apr→8,000for8mon
thsofmarketingconsultingonFeb1.AJEonApr30.∗DrMarketingExpense3,000/CrPrep
aidMarketing3,000∗(3months:Feb,Mar,Apr→1,000 × 3 = 3,000)
ADJUSTING JOURNAL ENTRIES WITH
COMPLETE SOLUTIONS
AJEs 1–180: Complete Solutions
1–30: Prepaid Expenses (Asset method)
1. Paid 1,200for12monthsofinsuranceonJan1.AJEonJan31.∗DrInsuranceExpense10
0/CrPrepaidInsurance100∗(1,200for12monthsofinsuranceonJan1.AJEonJan31.∗DrI
nsuranceExpense100/CrPrepaidInsurance100∗(1,200 ÷ 12 = 100/month)
2. Paid 6,000for6monthsofrentonMar1.AJEonMar31.∗DrRentExpense1,000/CrPre
paidRent1,000∗(6,000for6monthsofrentonMar1.AJEonMar31.∗DrRentExpense1,00
0/CrPrepaidRent1,000∗(6,000 ÷ 6 = 1,000/month; 1 month used)
3. Paid 3,600for12monthsofsoftwarelicenseonApr1.AJEonDec31.∗DrSoftwareExpe
nse2,700/CrPrepaidSoftware2,700∗(3,600for12monthsofsoftwarelicenseonApr1.A
JEonDec31.∗DrSoftwareExpense2,700/CrPrepaidSoftware2,700∗(3,600 ÷ 12 =
300/month × 9 months = 2,700)
4. Paid 24,000for2yearsofmaintenanceonJuly1,Year1.AJEonDec31,Year1.∗DrMaint
enanceExpense6,000/CrPrepaidMaintenance6,000∗(24,000for2yearsofmaintenan
ceonJuly1,Year1.AJEonDec31,Year1.∗DrMaintenanceExpense6,000/CrPrepaidMain
tenance6,000∗(24,000 ÷ 24 = 1,000/month × 6 months = 6,000)
5. Paid 900for3monthsofadvertisingonSep1.AJEonSep30.∗DrAdvertisingExpense30
0/CrPrepaidAdvertising300∗(900for3monthsofadvertisingonSep1.AJEonSep30.∗Dr
AdvertisingExpense300/CrPrepaidAdvertising300∗(900 ÷ 3 = 300/month)
6. Paid $15,000 for 5 months of consulting fees prepaid on Oct 1. AJE on Oct 31.
*Dr Consulting Expense 3,000 / Cr Prepaid Consulting 3,000*
,7. Paid 7,200for12monthsofpropertytaxonNov1.AJEonDec31.∗DrPropertyTaxExpe
nse1,200/CrPrepaidPropertyTax1,200∗(7,200for12monthsofpropertytaxonNov1.AJ
EonDec31.∗DrPropertyTaxExpense1,200/CrPrepaidPropertyTax1,200∗(7,200 ÷ 12 =
600/month × 2 months = 1,200)
8. Paid 4,800for4monthsofequipmentrentalonFeb1.AJEonMar31.∗DrRentalExpens
e2,400/CrPrepaidRent2,400∗(2monthsused:Feb,Mar→4,800for4monthsofequipm
entrentalonFeb1.AJEonMar31.∗DrRentalExpense2,400/CrPrepaidRent2,400∗(2mo
nthsused:Feb,Mar→1,200 × 2 = 2,400)
9. Paid $10,000 for 10 months of security services on May 1. AJE on May 31.
*Dr Security Expense 1,000 / Cr Prepaid Security 1,000*
10. Paid 2,400for12monthsofwebsitehostingonAug1.AJEonDec31.∗DrHostingExpe
nse1,000/CrPrepaidHosting1,000∗(2,400for12monthsofwebsitehostingonAug1.AJE
onDec31.∗DrHostingExpense1,000/CrPrepaidHosting1,000∗(200/month × 5
months = 1,000)
11. Paid 18,000for18monthsofinsuranceonJan1,Year1.AJEonDec31,Year1.∗DrInsur
anceExpense12,000/CrPrepaidInsurance12,000∗(18,000for18monthsofinsuranceo
nJan1,Year1.AJEonDec31,Year1.∗DrInsuranceExpense12,000/CrPrepaidInsurance1
2,000∗(1,000/month × 12 months = 12,000)
12. Paid 500for5monthsofnewspapersubscriptiononMar1.AJEonApr30.∗DrSubscri
ptionExpense200/CrPrepaidSubscription200∗(2monthsused:Mar,Apr→500for5mo
nthsofnewspapersubscriptiononMar1.AJEonApr30.∗DrSubscriptionExpense200/Cr
PrepaidSubscription200∗(2monthsused:Mar,Apr→100 × 2 = 200)
13. Paid 3,000for6monthsofjanitorialservicesonSep1.AJEonNov30.∗DrJanitorialExp
ense1,500/CrPrepaidJanitorial1,500∗(3,000for6monthsofjanitorialservicesonSep1.
AJEonNov30.∗DrJanitorialExpense1,500/CrPrepaidJanitorial1,500∗(500/month × 3
months = 1,500)
14. Paid 12,000for12monthsofgymmembershipforemployeesonOct1.AJEonDec31.
∗DrEmployeeBenefitsExpense3,000/CrPrepaidBenefits3,000∗(12,000for12months
ofgymmembershipforemployeesonOct1.AJEonDec31.∗DrEmployeeBenefitsExpense
3,000/CrPrepaidBenefits3,000∗(1,000/month × 3 months = 3,000)
, 15. Paid 7,500for15monthsoflegalretaineronApr1.AJEonSep30.∗DrLegalExpense3,
000/CrPrepaidLegal3,000∗(7,500for15monthsoflegalretaineronApr1.AJEonSep30.∗
DrLegalExpense3,000/CrPrepaidLegal3,000∗(500/month × 6 months = 3,000)
16. Paid 2,000for4monthsofofficecleaningonNov1.AJEonDec31.∗DrCleaningExpens
e1,000/CrPrepaidCleaning1,000∗(2,000for4monthsofofficecleaningonNov1.AJEon
Dec31.∗DrCleaningExpense1,000/CrPrepaidCleaning1,000∗(500/month × 2
months = 1,000)
17. Paid 9,600for8monthsofcloudstorageonJan1.AJEonMar31.∗DrCloudExpense3,
600/CrPrepaidCloud3,600∗(9,600for8monthsofcloudstorageonJan1.AJEonMar31.∗
DrCloudExpense3,600/CrPrepaidCloud3,600∗(1,200/month × 3 months = 3,600)
18. Paid 14,400for12monthsoftrainingprogramonMar1.AJEonDec31.∗DrTrainingEx
pense12,000/CrPrepaidTraining12,000∗(14,400for12monthsoftrainingprogramon
Mar1.AJEonDec31.∗DrTrainingExpense12,000/CrPrepaidTraining12,000∗(1,200/m
onth × 10 months = 12,000)
19. Paid 5,000for5monthsofwastedisposalonJun1.AJEonAug31.∗DrWasteExpense3
,000/CrPrepaidWaste3,000∗(5,000for5monthsofwastedisposalonJun1.AJEonAug31
.∗DrWasteExpense3,000/CrPrepaidWaste3,000∗(1,000/month × 3 months =
3,000)
20. Paid 36,000for3yearsofliabilityinsuranceonJan1,Year1.AJEonDec31,Year1.∗DrIn
suranceExpense12,000/CrPrepaidInsurance12,000∗(36,000for3yearsofliabilityinsu
ranceonJan1,Year1.AJEonDec31,Year1.∗DrInsuranceExpense12,000/CrPrepaidInsur
ance12,000∗(36,000 ÷ 36 = 1,000/month × 12 months = 12,000)
21. Paid 1,800for6monthsofinternetonOct1.AJEonDec31.∗DrInternetExpense900/
CrPrepaidInternet900∗(1,800for6monthsofinternetonOct1.AJEonDec31.∗DrInterne
tExpense900/CrPrepaidInternet900∗(300/month × 3 months = 900)
22. Paid 8,000for8monthsofmarketingconsultingonFeb1.AJEonApr30.∗DrMarketin
gExpense3,000/CrPrepaidMarketing3,000∗(3months:Feb,Mar,Apr→8,000for8mon
thsofmarketingconsultingonFeb1.AJEonApr30.∗DrMarketingExpense3,000/CrPrep
aidMarketing3,000∗(3months:Feb,Mar,Apr→1,000 × 3 = 3,000)
