Question

Assume the following adjustment data.

1. Supplies on hand at October 31 total $500.
2. Expired insurance for the month is $100.
3. Depreciation for the month is $75.
4. As of October 31, services worth $800 related to the previously recorded unearned revenue had been performed.
5. Services performed but unbilled (and no receivable has been recorded) at October 31 are $280.
6. Interest expense accrued at October 31 is $70.
7. Accrued salaries at October 31 are $1,400.
Prepare the adjusting entries for the items above.

Answer 1

1.Dr Supplies Expense $2,000

Cr Supplies $2,000

2. Dr Insurance Expense $100

Cr Prepaid Insurance $100

3. Dr Depreciation Expense $75

Cr Accumulated Depreciation- Equipment $75

4. Dr Unearned Service Revenue $800

Cr Service Revenue $800

5. Dr Accounts Receivable $280

Cr Service Revenue $280

6. Dr Interest Expense $70

Cr Interest Payable $70

7. Dr Salaries & Wages Expense $1,400

Cr Salaries & Wages Payable $1,400

Step-by-step explanation:

Preparation of the adjusting entries

1. Dr Supplies Expense $2,000

Cr Supplies $2,000

[$2,500 - $500]

2. Dr Insurance Expense $100

Cr Prepaid Insurance $100

3. Dr Depreciation Expense $75

Cr Accumulated Depreciation- Equipment $75

4. Dr Unearned Service Revenue $800

Cr Service Revenue $800

5. Dr Accounts Receivable $280

Cr Service Revenue $280

6. Dr Interest Expense $70

Cr Interest Payable $70

7. Dr Salaries & Wages Expense $1,400

Cr Salaries & Wages Payable $1,400