Question

Prepare the necessary adjusting entries at December 31, 2019 for the Washington Apple Company. Assume that no adjustments were made during the year. Use the journal below.
a. On October 1, 2019 the company purchased for cash a one year fire policy for $4000.
b. The company had depreciation on equipment of $12,500 for the year.
c. On December 28, 2019 the company received $4000 cash for products. The entire $4000 was counted as revenues for the year when the transaction was made. One half of the product was shipped on December 30, 2019 and the other half won't be produced and shipped until mid-January.

Answer 1

Answer:

Entries are given

Explanation:

Fire policy will be debited as it is an asset for the company. Depreciation is always debited as it is a non-cash expense and accumulated depreciation will be credited related to the equipment depreciated. Revenue will be recognized to the extent of value the company has provided as a service or a product.

                                                                         DEBIT         CREDIT

Fire policy                                                        $4,000

cash                                                                                      $4,000

Depreciation expense                                    $12,500

Accumulated depreciation (equipment)                            $12,500

Cash                                                                   $4.000

Revenue                                                                                $2,000

Unearned revenue                                                               $2.000