Question

Wages of $8,000 are earned by workers but not paid as of December 31. Depreciation on the company’s equipment for the year is $11,440. The Office Supplies account had a $350 debit balance at the beginning of the year. During the year, $5,367 of office supplies are purchased. A physical count of supplies at December 31 shows $587 of supplies available. The Prepaid Insurance account had a $5,000 balance at the beginning of the year. An analysis of insurance policies shows that $1,800 of unexpired insurance benefits remain at December 31. The company has earned (but not recorded) $700 of interest revenue for the year ended December 31. The interest payment will be received 10 days after the year-end on January 10. The company has a bank loan and has incurred (but not recorded) interest expense of $5,000 for the year ended December 31. The company will pay the interest five days after the year-end on January 5. For each of the above separate cases, prepare adjusting entries required of financial statements for the year ended (date of) December 31.

Answer 1

Answer:

wages expense 8,000 debit

   wages payables   8,000 credit

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depreciation expense 11,440 debit

  accumulated depreciation equipment 11,440 credit

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supplies expense 5,130 debit

   supplies                  5,130 credit

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Insurance expense 3,200 debit

    Prepaid Insurance   3,200 credit

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Interest Receivables 700 debit

    Interest Revenue      700 credit

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interest expense 5,000 debit

  Interest payable   5,000 credit

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Explanation:

We follow the accountign rinciples: Debit = Credit

And one line per account

and all accounts posted must have a balance

Additional calculations:

Supplies

beginning + purchase = used + ending

350 + 5,367 =  used + 587

used supplies = 350 + 5,367 - 587 = 5,130

Insurance

Beginning unexpired - Ending unexired = expired

5,000 - 1,800 = 3,200