Exercise 4-9 (Algo) Record transactions and adjustments LO 2, 6, 7 Record the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet category or on the income statement by entering the account name and amount and indicating whether it is an addition (+) or subtraction (–). Column headings reflect the expanded balance sheet equation; items that affect net income should not be shown as affecting stockholders' equity. The first transaction is provided as an illustration. During the month, the Supplies (asset) account was debited $1,800 for supplies purchased. The cost of supplies used during the month was $1,250. Record the adjustment to properly reflect the amount of supplies used and supplies still on hand at the end of the month. An insurance premium of $480 was paid for the coming year. Prepaid Insurance was debited. Wages of $3,350 were paid for the current month. Interest revenue of $250 was received for the current month. Accrued $670 of commissions payable to sales staff for the current month. Accrued $130 of interest expense at the end of the month. Received $2,175 on accounts receivable accrued at the end of the prior month. Purchased $620 of merchandise inventory from a supplier on account. Paid $110 of interest expense for the month. Accrued $890 of wages at the end of the current month. Paid $570 of accounts payable. Required: Indicate the financial statement effect. Prepare the journal entry for the above transactions. Required 1 Indicate the financial statement effect. Balance Sheet Category Income Statement Transaction/ Adjustment Assets = Liabilities + Stockholders' Equity Net Income Effect a. Supplies -1,250 Supplies Exp -1,250 b. c. 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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Exercise 4-9 (Algo) Record transactions and adjustments LO 2, 6, 7

Record the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet category or on the income statement by entering the account name and amount and indicating whether it is an addition (+) or subtraction (–). Column headings reflect the expanded balance sheet equation; items that affect net income should not be shown as affecting stockholders' equity. The first transaction is provided as an illustration.

During the month, the Supplies (asset) account was debited $1,800 for supplies purchased. The cost of supplies used during the month was $1,250. Record the adjustment to properly reflect the amount of supplies used and supplies still on hand at the end of the month.
An insurance premium of $480 was paid for the coming year. Prepaid Insurance was debited.
Wages of $3,350 were paid for the current month.
Interest revenue of $250 was received for the current month.
Accrued $670 of commissions payable to sales staff for the current month.
Accrued $130 of interest expense at the end of the month.
Received $2,175 on accounts receivable accrued at the end of the prior month.
Purchased $620 of merchandise inventory from a supplier on account.
Paid $110 of interest expense for the month.
Accrued $890 of wages at the end of the current month.
Paid $570 of accounts payable.

Required:

Indicate the financial statement effect.
Prepare the journal entry for the above transactions.

Required 1

Indicate the financial statement effect.

Balance Sheet Category		Income Statement
Transaction/ Adjustment	Assets	=	Liabilities	+	Stockholders' Equity	Net Income Effect
a.	Supplies -1,250					Supplies Exp -1,250
b.

c.
d.
e.
f.
g.

h.
i.
j.
k.

Journal entry worksheet
1 2
4 5 6 7 8
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Record the $1,800 supplies used during the month whereas supplies Expense
was debited $1,250 for supplies purchased.
Note: Enter debits before credits.
Eve
General Journal
Debit
Credit
а.
Record entry
Clear entry
View general journal

Expert Solution

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SOLUTION

A JOURNAL IS THE COMPANY'S OFFICIAL BOOK IN WHICH ALL BUSINESS TRANSACTION ARE RECORDED IN CHRONOLOGICAL ORDER.

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