Question

ournalize the following adjusting entries that were included on the work sheet for the month ended December 31. Assume the financial statements have been prepared. Dec. 31 Salaries for two days are unpaid at December 31, $1,420. Salaries are $3,550 for a five-day week. 31 Insurance was bought on August 1 for $4,080 for 12 months' coverage. Five months' coverage has expired, $1,700. 31 Depreciation for the month on equipment, $120, based on an asset costing $7,450 with a trade-in value of $250 and an estimated life of five years. 31 The balance in supplies before adjustment totaled $154. The amount of supplies on hand at the end of the year is $72. Journalize the adjustments in the order given in the question.

Answer 1

See explanation section:

Step-by-step explanation:

Date Account Name & Explanation Debit Credit

December 31 Salaries expense $1,420

Salaries payable $1,420

Note: Since salaries are unpaid, it is a liability. Hence, salaries payable are credit, however, salaries expenses are debit as it is an expense.

December 31 Insurance expense $1,700

Prepaid Insurance $1,700

Note: Since prepaid insurance are expired for the five months, therefore, prepaid insurance becomes credit. On the other hand, the expense are recorded as an expense because of the expiration of advance payment.

December 31 Depreciation expense $1,440

Accumulated Depreciation - Equipment $1,440

Note: Depreciation expense for a month = $120;

Depreciation expense for a year = $120 x 12 = $1,440

December 31 Supplies expense $72

Supplies $72

Note: Since supplies are used, supplies becomes an expense $(154-72) = $72.