need an answer for this problem Requirement #4: Prepare adjusting entries using
ID: 2359772 • Letter: N
Question
need an answer for this problemRequirement #4:
Prepare adjusting entries using the following information in the General Journal
below. Show your calculations!
a) One month's insurance has expired.
b) The remaining inventory of repair supplies is $388.
c) The estimated depreciation on repair equipment is $140.
d) The estimated income taxes are $80.
General Journal
Date Description(Account Name) Debit Credit
Requirement #5:
Post the adjusting entries to the General Ledger T-accounts and compute adjusted balances.
Just add to the balances that are already listed.
Explanation / Answer
It Looksthat you have posted an extract of the problem & hence some data is missing like Prepaid insurance amount etc. SO I am giving you the approach & you plug in the values from your problem. These sound like adjustments. A. You need to transfer one month of insurance from Prepaid Insurance to Insurance Expense. B. You need to bring your repair supplies account to agree with the actual balance of $388. You need to transfer the difference between your account balance and your actual balance of $388 to repair supplies expense. C. You need to record depreciation on your repair equipment. D. You need to record your income taxes. When showing journal entries using T accounts, you want to draw a T for each account affected by the journal entries. Above each T, write the name of the account. The left side of the T is where you put debits; the right side is were you put credits. For example, if you pay salaries of $1,000 for cash, you'd have a T for salaries with $1,000 on the left side of the T and a T for cash with $1,000 on the right side of the T. 1) I presume the insurance entry in the original journal was debit prepaid insurance and credit cash? If so, your adjusting entry is debit insurance expense and credit prepaid insurance for $200 ($2,400 per year divided by 12 months per year = $200 per month). Set up T accounts like I described above. In the journal it will look like this: Debit Insurance Expense___________$200 Credit Prepaid Insurance______________$200 2) This entry depends on how much inventory you had at the beginning of the period. You need to credit inventory for the beginning balance minus $388. This will make your ending balance $388. The debit side of this entry will be repair expense. 3) Debit depreciation expense for $140 and credit accumulated depreciation for 140. 4) Debit income tax expense for $80 and credit accrued income taxes for $80 (you are not crediting cash because you haven't paid the taxes yet)..
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