Prepare the adjusting entries using good form for each of the following situatio

Question

Prepare the adjusting entries using good form for each of the following situations as of January 31 (measurement date) for the one month of January: a. Purchased a one-year insurance policy on January 2 for $2,400. 5. 2 3 b. On January 1, the supplies account indicated a $680 balance. On January 31, a physical inspection reveals $200 on hand. c. Equipment was purchased last October 1 for a cost of $10,000. It is estimated to have a 5 year useful life and a $500 residual value. What is the depreciation adjusting entry for January? d. A customer had prepaid $1,200 for future services last September 10. At January 31, all but $200 of the work has been performed in Januany. e. Made arrangements with the local paper to run an ad every Wednesday for $50 each. There are four Wednesdays in January. At January 31, the bill had not yet been received. All accruals are done once a month. As per a contract we have completed performance on a service agreement for a client in the amount of $320. As of January 31, the client had not yet been billed. f.

Explanation / Answer

Journal Entries S.no. Accounts title and explanations Debit $ Credit $ a. Insurance expense Dr. 200 Prepaid insurance 200 b. Supplies expense Dr. 480      Supplies 480 c. Depreciation expense-Equipment Dr. 158.33     Accumulated Depreciation-Equipment 158.33 d. Unearned revenue Account Dr. 1000     Service revenue 1000 e. Advertisement Expense Dr. 200      Advertisement expense Payable 200 f. Accounts receivable Dr. 320      Service revenue 320

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