Chapter 5, Problem 16SPA

JOURNALIZE AND POST ADJUSTING ENTRIES FROM THE WORK SHEET Refer to Problem 5-15A and the following additional information:

REQUIRED

1. 1. Journalize the adjusting entries on page 5 of the general journal.
2. 2. Post the adjusting entries to the general ledger. (If you are not using the working papers that accompany this text, enter the balances provided in this problem before posting the adjusting entries.)

To determine

Prepare adjusting entries for the given transactions.

Explanation of Solution

Adjusting entries:

Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and stockholders’ equity) to maintain the records according to accrual basis principle.

Prepare adjusting entries for the ending inventory on supplies on November 30, $185.

Date	Account Titles and explanation	Post. Ref.		Debit ($)	Credit ($)
November 30	Supplies expense	523	390
	Supplies $\left[\$575-\$185\right]$	141			390
	(To record the additional amount of supplies that must be  used)

Table (1)

• Supplies expense (Expense) is a component of stockholder’s equity and there is an increase in the value of expense. Hence, debit the supplies expense by $390.
• Supplies are an asset and there is decrease in the value of an asset. Hence, credit the supplies by 390.

Prepare adjusting entries for the unexpired insurance as of November 30, $800.

Date	Account Titles and explanation	Post. Ref.	Debit ($)	Credit ($)
November 30	Insurance expense	535	500
	Prepaid insurance $\left[\$1,300-\$800\right]$	145		500
	(To record the insurance expense during the end of the year.)

Table (2)

• Insurance expense (Expense) is a component of stockholder’s equity and there is an increase in the value of expense. Hence, debit the insurance expense by $500.
• Prepaid insurance is an asset and there is decrease in the value of an asset. Hence, credit the prepaid insurance by $500.

Prepare adjusting entries for the depreciation expense on van, $300.

Date	Account Titles and explanation	Post. Ref.	Debit ($)	Credit ($)
November 30	Depreciation expense	541	300
	Accumulated depreciation	185.1		300
	(To record the depreciation expense at the end accounting of the year.)

Table (3)

• Depreciation expense (Expense) is a component of stockholder’s equity and there is an increase in the value of expense. Hence, debit the depreciation expense by $300.
• Accumulated depreciation is a contra asset and it has increased. Therefore, credit the accumulated depreciation by $300.

Prepare adjusting entries for the wages earned but   not yet paid as of November 30, $190.

Date	Account Titles and explanation	Post. Ref.	Debit ($)	Credit ($)
November 30	Wages expense	511	190
	Wages payable	219		190
	(To record the wages earned but not yet paid to the employees at the end of the year.)

Table (4)

• Wages expense (Expense) is a component of stockholder’s equity and there is an increase in the value of expense. Hence, debit the wages expense by $190.
• Wages payable is a liability and there is an increase in the value of the liability. Hence, credit the wages payable by $190.

To determine

Explanation of Solution

Post the adjusting entries to the general ledger.

Supplies                                                         Account No: 141
Date		Item	Post ref.	Debit	Credit	Balance
						Debit	Credit
November	1	Unadjusted				575
	30	Adjusting		390		185

(Table 5)

Prepaid insurance                                               Account No: 145
Date		Item	Post ref.	Debit	Credit	Balance
						Debit	Credit
November	1	Unadjusted				1,300
	30	Adjusting			500	800

(Table 6)

Accumulated Depreciation- Van                          Account No:185.1
Date		Item	Post ref.	Debit	Credit	Balance
						Debit	Credit
November	30	Adjusting			300		300

(Table 7)

Wages Payable                                                  Account No: 219
Date		Item	Post ref.	Debit	Credit	Balance
						Debit	Credit
November	30	Adjusting			190		190

(Table 8)

Wages Expense                                              Account No: 511
Date		Item	Post ref.	Debit	Credit	Balance
						Debit	Credit
November	1	Unadjusted				1,800
	30	Adjusting		190		1,990

(Table 9)

Supplies expense                                              Account No: 523
Date		Item	Post ref.	Debit	Credit	Balance
						Debit	Credit
November	30	Adjusting		390		390

(Table 10)

Insurance Expense                                              Account No: 535
Date		Item	Post ref.	Debit	Credit	Balance
						Debit	Credit
November	30	Adjusting		500		500

(Table 11)

Depreciation expense-Van                                     Account No: 541
Date		Item	Post ref.	Debit	Credit	Balance
						Debit	Credit
November	30	Adjusting		300		300

(Table 12)