Question

The unadjusted trial balance for Sierra Corp. is shown below.

SIERRA CORPORATION Trial Balance October 31, 2017
Debit Credit
Cash $15,200
Supplies 2,500 `
Prepaid Insurance 600
Equipment 5,000
Notes payable $5,000
Accounts Payable 2,500
Unearned Service Revenue 1,200
Common Stock 10,000
Retained Earnings 0
Dividends 500
Service Revenue 10,000
Salaries and Wages Expense 4,000
Rent Expense 900
$28,700 $28,700
Assume the following adjustment data.

1. Supplies on hand at October 31 total $500.

2. Expired insurance for the month is $100.

3. Depreciation for the month is $75

4. As of October 31, services worth 4\$800 related to the previously recorded unearned revenue had been performed.

5. Services performed but unbilled and no receivables have been recorded at October 31 are $280.

6. Interest expense accrued at October 31 is $70.

7. Accrued salaries at October 31 are $1,400

Prepare the adjusting entries for the items above.

Answer 1

Answer:

1. Dr Cost of goods manufactured 2000

             Cr    supplies                             2000

2.Dr  Insurance expense  100

           Cr    Prepaid insurance     100

3. Dr Depreciation expense  75

              Cr  Accumulated depreciation   75

4. Dr unearned revenue  800

                Cr   service income      800

5. Dr Account receivable 280

               Cr     Service revenue    280

6. Dr Interest expense    70

             Cr  Interest payable     70

7. Dr Salaries expense    1400

                Cr Salaries payable   1400

Explanation:

1. At the end of reporting 500 supplies were at hand (2500-500)= 2000 used and closes in to cost of goods manufactured.

2.Prepaid insurance was 600 and expires 100 of the month.(600-100)=500 will be prepaid.

4. Revenue is earned which was unearned and collection was recorded and liability created of that amount,this is done because of matching principle.