Garvey Company’s unadjusted trial balance includes the following account balance
ID: 2480574 • Letter: G
Question
Garvey Company’s unadjusted trial balance includes the following account balances as of December 31, 2015: Debits Credits Cash $ 70,270 Accounts receivable 121,700 Interest receivable 1,480 Supplies 144,900 Prepaid insurance 9,150 Notes Receivable (short-term) 52,700 Equipment 290,400 Accumulated Depreciation––Equipment $ 67,400 Accounts payable 108,600 Salaries and Wages Payable 22,500 Unearned revenue 10,100 Notes Payable (long-term) 91,000 Common Stock 226,000 Retained earnings 149,800 Service revenue 42,300 Interest revenue 22,800 Supplies Expense 0 Repair and Maintenance Expense 27,750 Rent Expense 18,700 Depreciation Expense 0 Insurance Expense 0 Salaries and Wages Expense 3,450 Totals $ 740,500 $ 740,500 The following data are available to determine adjusting entries: A) Insurance purchased at the beginning of July for $9,150 provided coverage for twelve months (July 2015 through June 2016). The insurance coverage for July through December totaling $4,575 has now been used. B) The company estimates $8,600 in depreciation each year. C) Account showed $90,200 of supplies on hand at the end of the year. D) An additional $350 of interest has been earned but has not yet been uncollected on the outstanding notes receivable. E) Services in the amount of $6,050 were performed for customers who had previously paid in advance. F) Services in the amount of $2,900 were performed; these services have not yet been billed or recorded. Required: a. Prepare the adjusting entries that are required at the end of the period. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Explanation / Answer
Garvey company
Accounts
Debit
Credit
Insurance expense
4,576
To prepaid insurance
4,576
Depreciation expense
8,600
To Accumulated depreciation
8,600
Supplies expense
54,700
To supplies
(144,900 – 90,200)
54,700
Interest receivable
350
To interest income
350
Unearned service revenue
6,050
To Service revenue
6,050
Account receivable
2,900
To Service revenue
2,900
Accounts
Debit
Credit
Insurance expense
4,576
To prepaid insurance
4,576
Depreciation expense
8,600
To Accumulated depreciation
8,600
Supplies expense
54,700
To supplies
(144,900 – 90,200)
54,700
Interest receivable
350
To interest income
350
Unearned service revenue
6,050
To Service revenue
6,050
Account receivable
2,900
To Service revenue
2,900
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