Question

Preparing adjusting entries LO P1.

A. wages of $6,000 are earned by workers but not paid as of December 31, 2017.

B. Depreciation on the company's equipment for 2017 is $11,200.

C. The office supplies account had a $440 debit balance on December 31, 2016. During 2017, $4,983 of office supplies are purchased. A physical count of supplies at December 31st, 2017, shows $548 of supplies available.

D. The prepaid Insurance account had a $5,000 balance on December 31, 2016. An Analysis of insurance policies shows that t $3200 of unexpired insurance benefits remain at December 31, 2017.

E. The company has earned (but not recorded) $900 of interest from Investments in CDs for the year ended December 31, 2017. The interest Revenue will be received on January 10, 2018.

F. The company has a bank loan and has incurred (but not recorded) interest expense of $4,000 for the year ended December 31, 2017. The company must pay the interest on January 2, 2018.


** For each of the above separate cases, prepare adjusting entries required of financial statements for the year ended (date of) December 31, 2017.

Answer 1

The adjustment entries are accounting postings that need to be made (Journalised) before a financial statement can be drawn.

The absence of these postings will mam our financial statement wrong and misleading to users.

It is important therefore that the Account an passes these entries before the period ends.

The respective entries are listed below:

Step-by-step explanation:

Adjustment entries

A.

Dr. wage Expense Account with $6,000

Cr. Wage Payable Account with $6,000

(Being Wage Payment due employees not yet paid)

B.

Dr. Depreciation of Office equipment Account with $11,200

Cr. Accumulated Depreciation Account with $11,200

(Being depreciation of office equipment charge for 2017)

C

Dr. Cost of goods sold with $4,875

Cr. Supplies account with $4,875

(Being cost of sales in 2017)

D.

Dr. Insurance Expense Account with $1,800

Cr. Prepaid Insurance Account with $1,800

(Being expired insurance claim in 2017)

E.

Dr. Accrued interest income on CDs with $900

Cr. Interested in com on CDs with $900

(Being accrued interest on CDs in 2017)

F.

Dr. Interest on loan account with $4,000

Cr. Accrued interest on loan/interest on loan payable account with $4,000

(Being interested on loan due in 2017)