Question

Wages of $8,000 are earned by workers but not paid as of december 31, 2017. depreciation on the company’s equipment for 2017 is $18,000. the office supplies account had a $240 debit balance on december 31, 2016. during 2017, $5,200 of office supplies are purchased. a physical count of supplies at december 31, 2017, shows $440 of supplies available. the prepaid insurance account had a $4,000 balance on december 31, 2016. an analysis of insurance policies shows that $1,200 of unexpired insurance benefits remain at december 31, 2017. the company has earned (but not recorded) $1,050 of interest from investments in cds for the year ended december 31, 2017. the interest revenue will be received on january 10, 2018. the company has a bank loan and has incurred (but not recorded) interest expense of $2,500 for the year ended december 31, 2017. the company must pay the interest on january 2, 2018.

Answer 1

The following are the adjusting entries:
- Wages Expense 8000
Wages Payable 8000

- Depreciation Expense – Equipment 18000
Accumulated Depreciation – Equipment 18000

- Office Supplies Expense 5000
Office Supplies 5000

- Insurance Expense 2800
Prepaid Insurance 2800

- Interest Receivable 1050
Interest Revenue 1050

- Interest Expense 2500
Interest Payable 2500