PROBLEM 2 (10%) Prepare adjusting entries for the following transactions. Omit e

Question

PROBLEM 2 (10%)

Prepare adjusting entries for the following transactions. Omit explanations.

1.         Depreciation on equipment is $1,340 for the accounting period.

2.         Interest owed on a loan but not paid or recorded (accrual) is $275.

3.         There was no beginning balance of supplies and $550 of office supplies were purchased during the period. At the end of the period $100 of supplies were on hand.

4.         Legal service revenues of $4,000 were collected in advance. By year end $900 was still unearned.

5.         Salaries incurred by year end but not yet paid or recorded amounted to $900.

           

No.

Account Titles

Debit

Credit

1.

2.

3.

4.

5.

No.

Account Titles

Debit

Credit

Explanation / Answer

Solution:

Journal Debit Credit 1 Depreciation 1,340 Equipment 1,340 2 Interest Expense 275 Accured Interest 275 3 Supplies Expense 450 Supplies 450 4 Cash 4,000 Revenue sales 3,100 Unearned Revenue 900 5 Salaries Expense 900 Salaries Outstanding 900

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