Chapter 3, Problem 6E

Preparing adjusting entries P1 P2 P3

Prepare adjusting journal entries for the year ended (date of) December 31 for each of these separate situations. Entries can draw from the following partial chart of accounts: Cash; Accounts Receivable; Supplies; Prepaid Insurance; Prepaid Rent; Equipment; Accumulated Depreciation-Equipment; Wages Payable; Unearned Revenue; Revenue; Wages Expense; Supplies Expense; Insurance Expense; Rent Expense; and Depreciation Expense-Equipment.

a. Depreciation on the company's equipment for the year is computed to be $18,000.

b. The Prepaid Insurance account had a $6,000 debit balance at December 31 before adjusting for the costs of any expired coverage. An analysis of the company's insurance policies showed that $1,100 of unexpired insurance coverage remains.

c. The Supplies account had a $700 debit balance at the beginning of the year; and $3,480 of supplies were purchased during the year. The December 31 physical count showed $300 of supplies available.

d. Two-thirds of the work related to $15,000 of cash received in advance was performed this period.

e. The Prepaid Rent account had a $6,800 debit balance at December 31 before adjusting for the costs of expired prepaid rent. An analysis of the rental agreement showed that $5,800 of prepaid rent had expired.

f. Wage expenses of $3,200 have been incurred but are not paid as of December 3 1.