Question Completion:
Record the adjusting entries.
Answer:
Adjusting Journal Entries:
Debit Depreciation Expense - Mountain Bikes $6,660
Credit Accumulated Depreciation - Mountain Bikes $6,660
To record depreciation expense for the period.
Debit Insurance Expense $
Credit Prepaid Insurance $
To record the insurance expense for the period.
Debit Rental Expense $
Credit Prepaid Rental $
To record the rental expense for the period.
Debit Office Supplies Expense $700
Credit Office Supplies $700
To record office supplies expense for the period.
Debit Interest Expense $
Credit Interest Expense Payable $
To record interest expense on the $44,000 loan.
Debit Racing Supplies Expense $1,990
Credit Racing Supplies $1,990
To record racing supplies expense for the period.
Debit Income Tax Expense $13,900
Credit Income Tax Payable $13,900
To record income tax expense payable.
Explanation:
Adjusting journal entries are recorded in order to present elements of financial statements based on the accrual basis and not whether cash was paid or received.
In this question, some data were not provided. This is why some figures were not disclosed for Insurance Expense, Rental Expense, and Interest Expense. But, the accounting treatments remain valid. Only the figures are missing.
