To determine Prepare Adjusting entries for Incorporation PPSS on December 31 of the current year. Explanation Adjusting entries: Adjusting entries are the journal entries which are recorded at the end of the accounting period to correct or adjust the revenue and expense accounts, to concede with the accrual principle of accounting. a. Wages expense is an expense account which is a component of stockholders equity. There is an increase in the expense which decreases the stock holders’ equity. Hence, debit wages expense with $7,500. Wages payable is a liability. There is an increase in the liability. Hence, credit wages payable with $7,500 b. Unearned revenue is a liability. There is a decrease in the liability. Hence, debit unearned revenue with $4,000. Cleaning service revenue is revenue which is a component of stockholders’ equity. There is an increase in the revenue account which increases the stockholders’ equity. Hence, credit cleaning service revenue with $4,000. c. Utilities expense is the expense account which is a component of stockholders’ equity. There is an increase in the expense which decreases the stockholders’ equity. Hence, debit utilities expense with $520. Utilities payable is a liability. There is an increase in liability. Hence, credit utilities payable with $520. d. Interest expense is an expense account which is a component of stockholders’ equity. There is an increase in the expense account which decreases the stockholders’ equity. Hence, debit interest expense with $2,000. Interest payable is a liability. There is an increase in the liability. Hence, credit interest payable with $2,000. e. Accounts receivable is an asset...

10th Edition

ISBN: 9781260481563

Author: Libby, Robert

Publisher: MCGRAW-HILL HIGHER EDUCATION

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Financial Accounting

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