Question

During the month, the Supplies (asset) account was debited $2,000 for supplies purchased. The cost of supplies used during the month was $1,250. Record the adjustment to properly reflect the amount of supplies used and supplies still on hand at the end of the month. An insurance premium of $440 was paid for the coming year. Prepaid Insurance was debited. Wages of $3,400 were paid for the current month. Interest revenue of $270 was received for the current month. Accrued $620 of commissions payable to sales staff for the current month. Accrued $130 of interest expense at the end of the month. Received $2,675 on accounts receivable accrued at the end of the prior month. Purchased $700 of merchandise inventory from a supplier on account. Paid $130 of interest expense for the month. Accrued $870 of wages at the end of the current month. Paid $590 of accounts payable.

Answer 1

Journal Entries:

1. Debit Supplies Expense $1,250

Credit Supplies $1,250

To record supplies expense for the month.

2. Debit Prepaid Insurance $440

Credit Cash $440

To record insurance prepaid.

Debit Insurance Expense $37

Credit Prepaid Insurance $37

To record insurance expense for the month.

3. Debit Wages Expense $3,400

Credit Cash Cash $3,400

To record wages paid.

4. Debit Sales Commissions Expense $620

Credit Sales Commission Payable $620

To record the sales commission expense.

5. Debit Interest Expense $130

Credit Interest Payable $130

To record the interest expense.

6. Debit Cash $2,675

Credit Accounts Receivable $2,675

To record the receipt on account.

7. Debit Inventory $700

Credit Accounts Payable $700

To record the purchase of inventory on account.

8. Debit Interest Payable $130

Credit Cash $130

To record the payment of interest.

9. Debit Wages Expense $870

Credit Wages Payable $870

To record accrued wages expense.

10. Debit Accounts Payable $590

Credit Cash $590

To record payment on account.

Step-by-step explanation:

a) Data and Analysis:

1. Supplies Expense $1,250 Supplies $1,250

2. Prepaid Insurance $440 Cash $440

Insurance Expense $37 ($440/12)

Prepaid Insurance $37

3. Wages Expense $3,400 Cash $3,400

4. Sales Commissions Expense $620 Sales Commission Payable $620

5. Interest Expense $130 Interest Payable $130

6. Cash $2,675 Accounts Receivable $2,675

7. Inventory $700 Accounts Payable $700

8. Interest Payable $130 Cash $130

9. Wages Expense $870 Wages Payable $870

10. Accounts Payable $590 Cash $590