**Transaction and Adjustment Instructions**You are required to record the effect, if any, of each transaction entry or adjusting entry on the appropriate balance sheet category or on the income statement by entering the account name and amount, 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. An illustration of the first transaction is provided.**Transactions:**a. During the month, the Supplies (asset) account was debited $4,800 for supplies purchased. The cost of supplies used during the month was $3,300. Adjust to reflect the amount of supplies used and those still on hand at the end of the month.b. An insurance premium of $440 was paid for the coming year. Prepaid Insurance was debited.c. Wages of $3,225 were paid for the current month.d. Interest revenue of $300 was received for the current month.e. Accrued $680 of commissions payable to sales staff for the current month.f. Accrued $100 of interest expense at the end of the month.g. Received $2,425 on accounts receivable accrued at the end of the prior month.h. Purchased $600 of merchandise inventory from a supplier on account.i. Paid $120 of interest expense for the month.j. Accrued $330 of wages at the end of the current month.k. Paid $530 of accounts payable.**Required:**a. Indicate the financial statement effect.b. Prepare the journal entry for the above transactions.**Data Entry Table**The table below is for entering the effects of each transaction/adjustment:- **Transaction or Adjustment**- **Balance Sheet Category**: - **Assets** - **Liabilities** - **Stockholders' Equity**- **Income Statement**: - **Net Income Effect**For example, for transaction (a):- **Assets**: Supplies -3,300- **Income Statement**: Supplies expense -3,300Continue entering each transaction or adjustment in the balance sheet and income statement columns as specified. **Transaction Recording for Financial Statements****Background:**Record the effect of each transaction or adjusting entry on the appropriate balance sheet category or income statement by entering the account name, amount, and indicating whether it is an addition (+) or subtraction (−). Column headings reflect the expanded balance sheet equation, excluding net income effects impacting stockholders’ equity. The first transaction is provided as an example.**Transactions:**a. During the month, the Supplies (asset) account was debited $4,800 for supplies purchased. The cost of supplies used during the month was $3,300. Record the adjustment to reflect the amount of supplies used and supplies on hand at month-end.b. An insurance premium of $440 was paid for the coming year. Prepaid Insurance was debited.c. Wages of $3,225 were paid for the current month.d. Interest revenue of $300 was received for the current month.e. Accrued $680 of commission payable to sales staff for the current month.f. Accrued $100 of interest expense at month-end.g. Received $2,425 on accounts receivable accrued at the end of the prior month.h. Purchased $600 of merchandise inventory from a supplier on account.i. Paid $120 of interest expense for the month.j. Accrued $830 of wages at month-end.k. Paid $530 of accounts payable.**Requirements:**a. Indicate the financial statement effect.b. Prepare the journal entry for the above transactions.**Sample Journal Entry:**| No | Event | General Journal | Debit | Credit ||----|-------|-------------------------|-------|--------|| 1 | a. | Supplies | 1,500 | || | | Supplies expense | | 1,500 |**Explanation:**- **Event a:** The transaction reflects a $1,500 transfer from Supplies (asset account) to Supplies Expense, indicating the consumed supplies cost for accurate monthly financial reporting. Instructions direct students to understand the balance sheet's impact and prepare appropriate journal entries.

Every journal entry has two aspects, i.e. the debit and credit side. Upon recording of a journal…

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. a. During the month, the Supplies (asset) account was debited $4,800 for supplies purchased. The cost of supplies used during the month was $3,300. Record the adjustment to properly reflect the amount of supplies used and supplies still on hand at the end of the month. b. An insurance premium of $440 was paid for the coming year. Prepaid Insurance was debited. c. Wages of $3,225 were paid for the current month. d. Interest revenue of $300 was received for the current month. e. Accrued $680 of commissions payable to sales staff for the current month. f. Accrued $100 of interest expense at the end of the month. g. Received $2,425 on accounts receivable accrued at the end of the prior month. h. Purchased $600 of merchandise inventory from a supplier on account. i. Paid $120 of interest expense for the month. j. Accrued $830 of wages at the end of the current month. k. Paid $530 of accounts payable. Required: a. Indicate the financial statement effect. b. Prepare the journal entry for the above transactions.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q