For each of the following separate situations, prepare the necessary adjustments (a) using the finan- cial statement effects template, and (b) in journal entry form. 1. Unrecorded depreciation on equipment is $610. 2.Onthedateforpreparingfinancialstatements,anestimatedutilitiesexpenseof$390hasbeen incurred, but no utility bill has yet been received or paid. 3.Onthefirstdayofthecurrentperiod,rentforfourperiodswaspaidandrecordedasa$2,800 debit to Prepaid Rent and a $2,800 credit to Cash. 4.Ninemonthsago,the Hartford Financial Services Group soldaone-yearpolicytoacustomer andrecordedthereceiptofthepremiumbydebitingCashfor$624andcreditingContract Liabilitiesfor$624.Noadjustingentrieshavebeenpreparedduringthenine-monthperiod. Hartford’s annual financial statements are now being prepared. 5.Attheendoftheperiod,employeewagesof$965havebeenincurredbutnotyetpaidor recorded. 6. At the end of the period, $300 of interest income has been earned but not yet received or recorded.
For each of the following separate situations, prepare the necessary adjustments (a) using the finan- cial statement effects template, and (b) in journal entry form. 1. Unrecorded depreciation on equipment is $610. 2.Onthedateforpreparingfinancialstatements,anestimatedutilitiesexpenseof$390hasbeen incurred, but no utility bill has yet been received or paid. 3.Onthefirstdayofthecurrentperiod,rentforfourperiodswaspaidandrecordedasa$2,800 debit to Prepaid Rent and a $2,800 credit to Cash. 4.Ninemonthsago,the Hartford Financial Services Group soldaone-yearpolicytoacustomer andrecordedthereceiptofthepremiumbydebitingCashfor$624andcreditingContract Liabilitiesfor$624.Noadjustingentrieshavebeenpreparedduringthenine-monthperiod. Hartford’s annual financial statements are now being prepared. 5.Attheendoftheperiod,employeewagesof$965havebeenincurredbutnotyetpaidor recorded. 6. At the end of the period, $300 of interest income has been earned but not yet received or recorded.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Preparing and Journalizing Adjusting Entries
For each of the following separate situations, prepare the necessary adjustments (a) using the finan-
cial statement effects template, and (b) in journal entry form.
1. Unrecorded depreciation on equipment is $610.
2.Onthedateforpreparingfinancialstatements,anestimatedutilitiesexpenseof$390hasbeen
incurred, but no utility bill has yet been received or paid.
3.Onthefirstdayofthecurrentperiod,rentforfourperiodswaspaidandrecordedasa$2,800
debit to Prepaid Rent and a $2,800 credit to Cash.
4.Ninemonthsago,the
Hartford Financial Services Group soldaone-yearpolicytoacustomer
andrecordedthereceiptofthepremiumbydebitingCashfor$624andcreditingContract
Liabilitiesfor$624.Noadjustingentrieshavebeenpreparedduringthenine-monthperiod.
Hartford’s annual financial statements are now being prepared.
5.Attheendoftheperiod,employeewagesof$965havebeenincurredbutnotyetpaidor
recorded.
6. At the end of the period, $300 of interest income has been earned but not yet received or recorded.
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