a. Depreciation on the company's equipment for the year is computed to be $16,000. b. The Prepaid Insurance account had a $7,000 debit balance at December 31 before adjusting for the costs of any expired coverage. An analysis of the company's insurance policies showed that $1,610 of unexpired insurance coverage remains. c. The Supplies account had a $470 debit balance at the beginning of the year, and $2,680 of supplies were purchased during the year. The December 31 physical count showed $555 of supplies available. d. One-fifth of the work related to $10,000 of cash received in advance was performed this period. e. The Prepaid Rent account had a $4,900 debit balance at December 31 before adjusting for the costs of expired prepaid rent. An analysis of the rental agreement showed that $3,290 of prepaid rent had expired. f. Wage expenses of $4,000 have been incurred but are not paid as of December 31. Prepare adjusting journal entries for the year ended December 31 for each separate situation. Answer is complete but not entirely correct. No Transaction General Journal Debit Credit 1 а. Depreciation expense-Equipment 16,000 Depreciation expense-Equipment 16,000 2 b. Insurance expense 5,390 O Prepaid insurance 5,390 3 Supplies expense 2,595 V с. Supplies 2,595 4 Unearned revenue 2,000 O Unearned revenue 2,000 Rent expense 3,290 е. Prepaid rent 3,290 f. Wages expense 4,000 O Wages payable 4,000 d.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Accounts Receiable, Accumiliated Deprecation - Equiptment, Cash, Deprecation Expense-Equiptment,Equiptment, Insurance Expense, Prepaid Insurance, Prepaid Rent, Rent Expense, Service Revenue, Supplies, Supplies Expense, Unearned Revenue, Wages Expense, Wages Payable.

a. Depreciation on the company's equipment for the year is computed to be $16,000.
b. The Prepaid Insurance account had a $7,000 debit balance at December 31 before adjusting for the costs of any expired coverage.
An analysis of the company's insurance policies showed that $1,610 of unexpired insurance coverage remains.
c. The Supplies account had a $470 debit balance at the beginning of the year, and $2,680 of supplies were purchased during the
year. The December 31 physical count showed $555 of supplies available.
d. One-fifth of the work related to $10,000 of cash received in advance was performed this period.
e. The Prepaid Rent account had a $4,900 debit balance at December 31 before adjusting for the costs of expired prepaid rent. An
analysis of the rental agreement showed that $3,290 of prepaid rent had expired.
f. Wage expenses of $4,000 have been incurred but are not paid as of December 31.
Prepare adjusting journal entries for the year ended December 31 for each separate situation.
Answer is complete but not entirely correct.
No
Transaction
General Journal
Debit
Credit
1
Depreciation expense-Equipment
16,000
а.
Depreciation expense-Equipment
16,000
2
b.
Insurance expense
5,390
Prepaid insurance
5,390
3
Supplies expense
2,595
C.
Supplies
2,595
4
d.
Unearned revenue
2,000
Unearned revenue
2,000
е.
Rent expense
3,290
Prepaid rent
3,290
f.
Wages expense
4,000
Wages payable
4,000

Expert Solution

Explanation -

Adjusting Entry –

Adjusting Entries are the entries that make the accrual principle work for the organization. These entries make the cash transaction the accrual one. Adjusting entries do not include cash. This also ensures that the transactions incurred in the current accounting period will be recorded in the current period and adjust the prepaid and accrual if any for further periods.

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