Question

Prepare adjusting journal entries, as needed, for the following items. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) The Supplies account shows a balance of $510, but a count of supplies reveals only $300 on hand at year-end. The company initially records the payments of all insurance premiums as prepaid insurance. The unadjusted trial balance at year-end shows a balance of $580 in Prepaid Insurance. A review of insurance policies reveals that $150 of insurance is unexpired. Employees work Monday through Friday, and salaries of $2,900 per week are paid each Friday. The company's year-end falls on Tuesday. At year-end, the company received a utility bill for December's electricity usage of $300 that will be paid in early January.

Answer 1

Answer and Explanation:

The adjusting entries are shown below:

1. Supplies expense $210 ($510 - $300)

To Supplies $210

(Being the supplies expense is recorded)

For recording this we debited the supplies expense as it increased the expense and credited the supplies as it reduced the assets

2. Insurance expense Dr $150

To Prepaid insurance $150

(Being the insurance expense is recorded)

For recording this we debited the insurance expense as it increased the expense and credited the prepaid insurance as it reduced the assets

3. Salaries expense Dr $1,160 ($2,900 × 2 days ÷ 5 days)

To Salaries payable $1,160

(Being the salaries expense is recorded)

For recording this we debited the salaries expense as it increased the expense and credited the salaries payable as it increased the liabilities

4. Electricity expense Dr $300

To Expense payable $300

(Being the electricity expense is recorded)

For recording this we debited the electricity expense as it increased the expense and credited the expense payable as it increased the liabilities