Answer:
1. Wages of $13,000 are earned by workers but not paid as of December 31.
Account Debit Credit
Wages Expense $13,000
Wages Payable $13,000
2. Depreciation on the company’s equipment for the year is $11,560.
Account Debit Credit
Depreciation Expense $11,560
Accumulated Depreciation $11,560
3. The Office Supplies account had a $490 debit balance at the beginning of the year. During the year, $4,582 of office supplies are purchased. A physical count of supplies at December 31 shows $508 of supplies available.
Account Debit Credit
Supplies Expense $4,582
Cash $4,582
Supplies Expense $4,564
Supplies $4,564
4. The Prepaid Insurance account had a $5,000 balance at the beginning of the year. An analysis of insurance policies shows that $3,200 of unexpired insurance benefits remain at December 31.
$1,800 worth of insurance have been spent, out of the initial $5,000 prepaid insurance balance. ($5,000 - $1,800 = $3,200)
Account Debit Credit
Prepaid Insurance $1,800
Insurance Expense $1,800
5. The company has earned (but not recorded) $950 of interest revenue for the year ended December 31. The interest payment will be received 10 days after the year-end on January 10.
Account Debit Credit
Interest Receivable $950
Interest Revenue $950
6. The company has a bank loan and has incurred (but not recorded) interest expense of $3,000 for the year ended December 31. The company will pay the interest five days after the year-end on January 5.
Account Debit Credit
Interest Expense $3,000
Interest Payable $3,000
The adjusted journal entries are passed to imply the effect of the transactions which are not being recorded or recorded incorrectly.
1. Wages of $13,000 are earned by workers but not paid as of December 31.
The wages expenses account will be debited by crediting the wages payable account by an amount of $13,000.
2. Depreciation on the company’s equipment for the year is $11,560.
The depreciation expenses account will be debited by crediting accumulated depreciation account with $11,560.
3. The Office Supplies account had a $490 debit balance at the beginning of the year. During the year, $4,582 of office supplies are purchased. A physical count of supplies at December 31 shows $508 of supplies available.
The supplies expenses will be calculated by adding opening balance of supplies and supplies purchased during the year and deducting the closing balance which will give us the amount of $4,564
4. The Prepaid Insurance account had a $5,000 balance at the beginning of the year. An analysis of insurance policies shows that $3,200 of unexpired insurance benefits remain at December 31.
$1,800 worth of insurance have been spent, out of the initial $5,000 prepaid insurance balance. ($5,000 - $1,800 = $3,200)
This amount is calculated by deducing the difference amount in the opening and closing balances.
5. The company has earned (but not recorded) $950 of interest revenue for the year ended December 31. The interest payment will be received 10 days after the year-end on January 10.
This is an entry of accrued interest revenue which will be recorded by debiting the interest receivables account and crediting interest revenue account by the amount $950.
6. The company has a bank loan and has incurred (but not recorded) interest expense of $3,000 for the year ended December 31. The company will pay the interest five days after the year-end on January 5.
This is an entry of outstanding interest and the interest expense account will be debited and interest payable account will be credited with the amount $3,000.
Therefore the adjusted journal entries for each scenario is explained and attached hereunder.
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