Question Completion:
Record the adjustments.
Answer:
Whispering Winds Company
1. Debit Interest Expense $464
Credit Interest Payable $464
To record the interest expense for 4 months.
2. Debit Supplies Expense $1,798
Credit Supplies $1,798
To record supplies expense for the year.
3. Debit Depreciation Expense - Equipment $1,160
Credit Accumulated Depreciation - Equipment $1,160
To record the depreciation expense for the year.
4. Debit Insurance Expense $1,421
Credit Prepaid Insurance $1,421
To record insurance expense for 7 months.
5. Debit Unearned Revenue $8,700
Credit Service Revenue $8,700
To record service revenue earned for December.
6. Debit Accounts Receivable $4,872
Credit Service Revenue $4,872
To record service revenue earned for December.
7. Debit Salaries Expense $6,264
Credit Salaries Payable $6,264
To accrue unpaid salaries for 3 days.
Explanation:
a) Data and Calculations:
Account balances on December 31, 2022:
Accounts Receivable $ 0
Accumulated Depreciation-Equipment 0
Equipment 8,120
Interest Payable 0
Notes Payable 11,600
Prepaid Insurance 2,436
Salaries and Wages Payable 0
Supplies 2,842
Unearned Service Revenue 34,800
b) Interest expense = $11,600 * 12% * 4/12
c) Supplies expense = $2,842 - 1,044 = $1,798
d) Insurance expense = $2,436 * 7/12 = $1,421
e) Service Revenue = $34,800 * 1/4 = $8,700 with the balance as Deferred Revenue.
f) Salaries expense for 3 days = $10,440 * 3/5 = $6,264
