Question

The ledger of Clayton Company includes the following unadjusted balances: Prepaid Insurance $3,000, Service Revenue $58,000, and Salaries and Wages Expense $25,000. Adjusting entries are required for (a) expired insurance $1,800; (b) services performed $1,100, but unbilled and uncollected; and (c) accrued salaries payable $800.

Answer 1

Explanation:

The adjusting entries are as follows

a.  Insurance expense A/c Dr $1,200

             To Prepaid insurance A/c $1,200

(Being the insurance expense is recorded)

The computation is shown below:

= $3,000 - $1,800

= $1,200

b. Account receivable Dr $1,100

       To Service revenue $1,100

(Being the service performed is recorded)

c. Salaries and wages expenses Dr $800

              To Salaries and wages payable $800

(Being the salaries and wages expense is recorded)