Problem 3: (15 Points) Lorring Landscaping has the following data for the Decemb

Question

Problem 3: (15 Points) Lorring Landscaping has the following data for the December 31 adjusting entries: a. Each Friday, Lorring pays employees for the current week's work. The amount of the weekly payroll is $6,000 for a five-day workweek. This year, December 31 falls on a Tuesday b. On January 1 of the current year, Lorring purchases an insurance policy that covers two years, $4,000. The beginning balance of Office Supplies was $4,100. During the year, Lorring purchased office supplies for $5,500, and at December 31 the office supplies on hand total $2,200. c. d. During December, Lorring designed a landscape plan and the client prepaid $4,000. Lorring recorded this amount as Unearned Revenue. The job will take several months to complete, and Loring estimates that the company has earned 50% of the total revenue during the current year At December 31, Lorring had earned $4,500 for landscape services completed for Tomball Appliances. e. f. Depreciation for the Equipment is $3,000. g. Lorring has incurred $800 of advertising expense to be paid on January 10. Requirements Journalize the adjusting entry needed on December 31

Explanation / Answer

Adjusting entries a Salaries and wages expense 2400 (6000*2/5)                 Salaries and wages payable 2400 b Insurance expense 2000             Prepaid insurance 2000 c Supplies expense 7400 (4100+5500-2200)             Office supplies 7400 d Unearned revenue 2000             Service revenue 2000 e Accounts receivable 4500             Service revenue 4500 f Depreciation expense 3000             Accumulated depreciation - equipment 3000 g Advertising expense 800           Accounts payable 800

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