Question

The ledger of Jahnke, Inc. on March 31, 2017, includes the following selected accounts before adjusting entries. Debit Credit Prepaid Insurance 2,400 Supplies 2,800 Equipment 34,500 Unearned Service Revenue 8,400 An analysis of the accounts shows the following. 1. Insurance expires at the rate of $200 per month. 2. Supplies on hand total $1,100. 3. The equipment depreciates $300 per month. 4. During March, services were performed for two-fifths of the unearned service revenue.Prepare the adjusting entries for the month of March.

Answer 1

Answer and Explanation:

The adjusting entries are as follows

1. Insurance expense $200  

      To Prepaid insurance  $200  

(Being insurance expense is recorded)

For recording this we debited the insurance expense as it increased the expense and credited the prepaid insurance as it decreased the assets

2. Supplies expense $1,700 ($2,800 - $1,100)

              To Supplies $1,700

(Being supplies expense is recorded)

For recording this we debited the supplies expense as it increased the expense and credited the supplies as it decreased the assets

3. Depreciation expense $300

        To Accumulated depreciation - Equipment $300

(Being the depreciation expense is recorded)

For recording this we debited the depreciation expense as it increased the expenses and credited the accumulated depreciation as it decreased the value of the assets

4. Unearned service revenue $3,360  ($8,400 × 2 ÷ 5)

              To Service revenue $3,360

(Being the unearned service revenue is recorded)

For recording this we debited the unearned service revenue as it decreased the liability and credited the service revenue as it increased the revenue