Depreciation on the company\'s equipment for 2017 is computed to be $12,000. The

Question

Depreciation on the company's equipment for 2017 is computed to be $12,000.

The Prepaid Insurance account had a $8,000 debit balance at December 31, 2017, before adjusting for the costs of any expired coverage. An analysis of the company’s insurance policies showed that $1,250 of unexpired insurance coverage remains.

The Office Supplies account had a $520 debit balance on December 31, 2016; and $2,680 of office supplies were purchased during the year. The December 31, 2017, physical count showed $614 of supplies available.

One-fifth of the work related to $10,000 of cash received in advance was performed this period.

The Prepaid Insurance account had a $5,800 debit balance at December 31, 2017, before adjusting for the costs of any expired coverage. An analysis of insurance policies showed that $4,550 of coverage had expired.

Wage expenses of $3,000 have been incurred but are not paid as of December 31, 2017.

Prepare adjusting journal entries for the year ended (date of) December 31, 2017, for each of these separate situations.

Explanation / Answer

Date Account Debit credit a Depreciation expense 12000 Accumulated depreciation -Equipment 12000 b Insurance expense 6750 Prepaid expense 6750 [insurance expired 8000-1250] c supplies expense 2586 supplies 2586 [supplies used 520+2680-614] d Unearned revenue 2000 revenue earned 2000 [revenue earned 10000*1/5] e Insurance expense 4550 prepaid insurance 4550 f wage expense 3000 wage payable 3000

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