Question

Wages of $8,000 are earned by workers but not paid as of December 31. Depreciation on the company’s equipment for the year is $10,480. The Office Supplies account had a $470 debit balance at the beginning of the year. During the year, $5,063 of office supplies are purchased. A physical count of supplies at December 31 shows $556 of supplies available.
A. The Prepaid Insurance account had a $5,000 balance at the beginning of the year. An analysis of insurance policies shows that $1,600 of unexpired insurance benefits remain at December 31.
B. The company has earned (but not recorded) $650 of interest revenue for the year ended December 31. The interest payment will be received 10 days after the year-end on January 10.
C. The company has a bank loan and has incurred (but not recorded) interest expense of $2,500 for the year ended December 31. The company will pay the interest five days after the year-end on January 5.

Answer 1

Answer:

(1). Wages expense(debit) => 8000.

wages payable (credit) => 8000.

(2). depreciation expense-equipment(debit) => $10,480.

accumulated depreciation-equipment => $10,480.

(3). Supplies expense(debit) => 4,977.

office supplies(credit) => 4977.

(4). Insurance expense(debit) => 3,400

prepaid insurance(credit) => 3,400.

(5000 - 1600).

(5). Interest receivable(debit) => $650

interest revenue(credit) => $650

(6). interest expense(debit) => $2,500

interest payable(credit) => $2,500.

Explanation:

So, our main aim in this question is to be able to prepare prepare an " adjusting entries" required of financial statements for the year ended (date of) December 31.

An adjusting entries can simply be defined as entry that is used in showing the expenses and income of a particular organization or company.

Thus, the entries can be written as:

(1). Wages expense(debit) => 8000.

wages payable (credit) => 8000.

(2). depreciation expense-equipment(debit) => $10,480.

accumulated depreciation-equipment => $10,480.

(3). Supplies expense(debit) => 4,977.

office supplies(credit) => 4977.

(4). Insurance expense(debit) => 3,400

prepaid insurance(credit) => 3,400.

(5000 - 1600).

(5). Interest receivable(debit) => $650

interest revenue(credit) => $650

(6). interest expense(debit) => $2,500

interest payable(credit) => $2,500.