Question

a. Depreciation on the company's equipment for the year is computed to be $15,000.
b. The Prepaid Insurance account had a $9,000 debit balance at December 31 before adjusting for the costs of any expired coverage. An analysis of the company’s insurance policies showed that $870 of unexpired insurance coverage remains.
c. The Office Supplies account had a $360 debit balance at the beginning of the year; and $2,680 of office supplies were purchased during the year.
d. The December 31 physical count showed $425 of supplies available.
e. One-third of the work related to $15,000 of cash received in advance was performed this period.
f. The Prepaid Rent account had a $5,100 debit balance at December 31 before adjusting for the costs of expired prepaid rent. An analysis of the rental agreement showed that $4,230 of prepaid rent had expired.
g. Wage expenses of $1,000 have been incurred but are not paid as of December 31.
Prepare adjusting journal entries for the year ended (date of) December 31 for each of these separate situations.

Answer 1

Answer: Please see explanation column for answers

Explanation:

a) To record Depreciation on equipments

Date               Account title                      Debit                   Credit

Dec 31st    Depreciation expenses       $15,000

                   Accumulate depreciation                               $15,000

b) To record insurance expenses

Date               Account title                      Debit                       Credit

Dec31      Insurance    Expenses              $8,130

  Prepaid insurance                                                                 $8,130

Calculation

Prepaid Insurance =Prepaid Insurance Debit Balance−Unexpired Insurance Coverage

=$9,000−$870

=$8,130

c)To record office supplies expenses

Date               Account title                               Debit                    Credit

Dec 31      Office Supplies   Expenses             $2,615

  Office supplies                                                                             $2,615

Calculation:

Office  Supplies=Office  Supplies Debit  Balance+

Amount of Office Supplies Purchased−

Office Supplies Existing

=$360+$2,680−$425

=$2,615

d)To record Adjustment in unearned revenue

Date               Account title                               Debit                    Credit

Dec 31    Unearned fee revenue                  $5,000

            Fee revenue                                                                     $5,000  

Fees Revenue=Cash Received For Fees×Portion of Fees Earned

=$15,000 x 1/3= $5,000

e)To record Adjustment in insurance expenses

Date               Account title                               Debit                   Credit

Dec 31    Insurance expenses                  $4,230

          Prepaid expenses                                                             $4,230

f)To record wages payable

Date               Account title                      Debit                        Credit

Dec 31    Wages  expenses                  $1,000

          Wages Payable                                                           $1,000

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