Answer:
Adjusting Journal Entries:
a. Debit Wages Expense $10,000
Credit Wages Payable $10,000
To record unpaid wages as of December 31.
b. Debit Depreciation Expense - Equipment $10,600
Credit Accumulated Depreciation - Equipment $10,600
To record depreciation expense for the year.
c. Debit Supplies Expense $5,066
Credit Supplies $5,066
To record the supplies expense for the year.
d. Debit Insurance Expense $3,400
Credit Prepaid Insurance $3,400
To record the insurance expense for the year.
e. Debit Interest Revenue Receivable $900
Credit Interest Revenue $900
To record earned interest receivable.
f. Debit Interest Expense $5,000
Credit Interest Expense Payable $5,000
To record interest on bank loan incurred.
Explanation:
The above adjusting entries are made in order to ensure that transactions are recorded in accordance with the accrual concept and matching principle of generally accepted accounting principles. These require that expenses and revenues are accrued to the period that they are incurred or earned and not when they are paid or received in cash.
