Question

The unadjusted trial balance of Sketch Star Makers Inc., prepared as of December 31, 2018, includes the following account balances. All of the accounts listed have normal balances. Cash $ 13,000 Accounts Receivable 2,600 Supplies 2,200 Prepaid Insurance 6,000 Equipment 16,000 Accumulated Depreciation 2,600 Notes Payable (long-term) 26,000 Deferred Revenue 8,000 Service Revenue 36,000 Salaries and Wages Expense 33,000 The following information is also available: A) A count of supplies revealed $1,000 worth on hand at December 31, 2018. B) An insurance policy, purchased on January 1, 2018, covers four years. C) The equipment depreciates at a rate of $1,600 per year; no depreciation has been recorded for 2018. D) One half (or 50%) of the amount recorded as Deferred Revenue remains deferred as of December 31, 2018. E) The accrued amount of salaries and wages at December 31, 2018 is $2,600.

Answer 1

Answer is given below.

Step-by-step explanation:

Required adjustments for the company as of December 31, 2015 is as prepared below:

Date Particulars L.F Amount ($) Amount ($)

A Supplies Expense (2,200-1,000) 1,200

Supplies

(for supplies expensed)

B Insurance Expense (6,000*12/48) 1,500

Prepaid Insurance 1,500

(for insurance for 2015 expensed)

C Depreciation expense 1,600

Accumulated dep- equipment 1,600

(Foe equipment depreciated)

D Unearned Revenue (8,000*.5) 4,000

Service Revenue 4,000

(For revenue earned)

E Salaries and wages expense 2,600

Salaries and Wages payable 2,600

(For salaries and wages accrued)