The following information is available for Alfa Co. on July 31 for the year just
ID: 2367161 • Letter: T
Question
The following information is available for Alfa Co. on July 31 for the year just ended.
a)This year's advertising bill for $2,000 is unrecorded and unpaid.
b)The estimated yearly depreciation on the furniture is $900.
c)Accrued salaries at year-end totalled $36,500.
d)$4,300 of the consulting fees paid to Alfa Co. in advance has been earned.
e)A review of the $13,000 unadjusted balance in the prepaid rent account shows a remaining balance of $11,000 at the end of the year.
Prepare the required adjusting entries at July 31, 2011.
Enter the transaction letter as the description when entering the transactions in the journal. Dates must be entered in the format dd/mmm (i.e., January 15 would be 15/Jan). For each journal entry, indicate how each account affects the balance sheet (Assets, Liabilities, Equity). Use + for increase and - for decrease. For example, if an account decreases equity, choose '-Equity'.
Explanation / Answer
The following information is available for Alfa Co. on July 31 for the year just ended.
a)This year's advertising bill for $2,000 is unrecorded and unpaid.
31/Jul
Debit Advertising Expense 2,000
Credit Accounts Payable 2,000
Debiting advertising expense account will increase expenses, which will decrease equity. Crediting accounts payable account will increases liabilities.
b)The estimated yearly depreciation on the furniture is $900.
31/Jul
Debit Depreciation Expense, Furniture 900
Credit Accumulated Depreciation, Furniture 900
Debiting Depreciation expense increases expenses which will decrease equity. Crediting Accumulatd Depreciation will decrease assets.
c)Accrued salaries at year-end totalled $36,500.
31/Jul
Debit Salary expense 36,500
Credit Salaries payable 36,500
Debiting salary expense will increase expenses which will decrease equity. Crediting salaries payable will increase liabilities.
d)$4,300 of the consulting fees paid to Alfa Co. in advance has been earned.
31/Jul
Debit Unearned Revenue 4,300
Credit Earned revenue 4,300
Debiting unearned revenue decreases liabilities. Crediting Earned revenue increases revenue which will increase equity.
e)A review of the $13,000 unadjusted balance in the prepaid rent account shows a remaining balance of $11,000 at the end of the year.
31/Jul
Debit Rent expense 2000
Credit Prepaid rent 2000
Debiting rent expenses increases expenses which will decrease equity. Crediting prepaid rent will decrease assets.
Prepare the required adjusting entries at July 31, 2011.
Enter the transaction letter as the description when entering the transactions in the journal. Dates must be entered in the format dd/mmm (i.e., January 15 would be 15/Jan). For each journal entry, indicate how each account affects the balance sheet (Assets, Liabilities, Equity). Use + for increase and - for decrease. For example, if an account decreases equity, choose '-Equity'.
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