Question

Information necessary to prepare the year-end adjusting entries appears below. a. Depreciation on the machines for the year is $9,900. b. Employee salaries are paid every two weeks. The last pay period ended on December 23. Salaries earned from December 24 through December 31, 2018, are $3,900. c. On September 1, 2018, Jaguar borrows $34,500 from a local bank and signs a note. The note requires interest to be paid annually on August 31 at 12%. The principal is due in five years. d. On March 1, 2018, the company purchases insurance for $23,400 for a one-year policy to cover possible injury to mechanics. The entire $23,400 was debited to Prepaid Insurance at the time of the purchase. e. $4,900 of supplies remains on hand at December 31, 2018. f. On December 30, Jaguar receives a utility bill of $2,150 for the month. The bill will not be paid until early January 2019, and no entry was recorded when the bill was received.

Answer 1

Answer:

Jaguar

Adjusting Journal Entries:

General Journal

Date Description                                     Debit       Credit

a.   Depreciation Expense-Equipment $9,900

     Accumulated Depreciation-Equipment         $9,900

To record depreciation expense for the year.

b.   Wages & Salaries Expense           $3,900

     Wages & Salaries Payable                             $,3900

To record unpaid salaries.

c.   Interest on Notes Expense         $1,380

    Interest on Notes Payable                             $1,380

To accrue interest on notes for 4 months to December 31.

d.  Insurance Expense                     $19,500

    Prepaid Insurance                                         $19,500

To accrue insurance expense for 10 months

e.  Supplies Expense                      $

    Supplies                                                        $

To record supplies expense for the year (difference between Supplies balance and Supplies remaining at the end ($4,900).

f.  Utilities Expense                        $2,150

   Utilities Payable                                           $2,150

To record utilities expense for the month.

Explanation:

Adjusting journal entries are prepared at the end of an accounting period.  They adjust the expense and revenue accounts in line with the accrual concept and the matching principle of generally accepted accounting principles.

The adjusting entries are for unpaid expenses, unreceived earned revenue, prepaid expenses, deferred revenue, and depreciation expenses, and correction of errors in posting transactions to the general ledger.