Question

A. Wages of $10,000 are earned by workers but not paid as of December 31.

b. Depreciation on the company’s equipment for the year is $10,960.
c. The Office Supplies account had a $410 debit balance at the beginning of December. During December, $6,470 of office supplies are purchased. A physical count of supplies at December 31 shows $697 of supplies available.
e. The Prepaid Insurance account had a $5,000 balance at the beginning of December. An analysis of insurance policies shows that $2,800 of unexpired insurance benefits remain at December 31.
f. The company has earned (but not recorded) $750 of interest revenue for the year ended December 31. The interest payment will be received on 10 days after the year-end January 10.
g. The company has a bank loan and has incurred (but not recorded) interest expense of $4,000 for the year ended December 31. The company will pay the interest five days after the year-end on January 5.

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

Answer 1

Adjusting entries

Step-by-step explanation:

Expenses and assets are being debited here and liabilities are being credited here. Adjusting entries required of financial statements for the year ended December 31 are given below.

A. (wages expense recorded)

DEBIT CREDIT

Wages Expense $10,000

Wages Payable $10,000

B. (depreciation expense recorded)

DEBIT CREDIT

Depreciation expense - Equipment $10,960

Accumulated depreciation - Equipment $ 10,960

C. (cost of goods sold recorded)

DEBIT CREDIT

Office supplies expense $4,470

($410 + $6,470 - $697)

Office supplies $4,470

D. (insurance expense incurred)

DEBIT CREDIT

Insurance expense $2,200

($5,000 - $2,800)

Prepaid insurance $2,200

e.(interest to be received recorded)

DEBIT CREDIT

Interest receivable $750

Interest revenue $750

f. (interest to be payable recorded)

DEBIT CREDIT

Interest expense $4,000

Interest payable $4,000