Verne Cova Company has the following balances in selected accounts on December 3
ID: 2598752 • Letter: V
Question
Verne Cova Company has the following balances in selected accounts on December 31, 2015.
All the accounts have normal balances. The information below has been gathered at December 31, 2015.
Prepare adjusting entries for the seven items described above. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
No.
Account Titles and Explanation
Debit
Credit
Accounts Receivable $ 0 Accumulated Depreciation—Equipment 0 Equipment 6,961 Interest Payable 0 Notes Payable 10,381 Prepaid Insurance 2,340 Salaries and Wages Payable 0 Supplies 2,366 Unearned Service Revenue 41,411 Exercise 3-5 Accounts Payable Accounts Receivable Accumulated Depreciation-Buildings Accumulated Depreciation-Equipment Advertising Expense Buildings Cash Common Stock Depreciation Expense Dividends Equipment Insurance Expense Interest Expense Interest Payable Land Maintenance and Repairs Expense Mortgage Payable Notes Payable Prepaid Advertising Prepaid Insurance Prepaid Rent Rent Expense Rent Revenue Retained Earnings Salaries and Wages Expense Salaries and Wages Payable Sales Revenue Service Revenue Supplies Supplies Expensee Unearned Rent Revenue Unearned Service Revenue Utilities ExpenseExplanation / Answer
The adjusting entries will be prepared as follows:
Account Titles and Explanation Debit Credit 1 Interest Expense ($10,075 x 12% x 4/12) 403 Interest Payable 403 2 Supplies Expense ($2,366 - $922) 1444 Supplies 1444 3 Depreciation Expense - Equipment 1669 Accumulated Depreciation - Equipment 1669 4 Insurance Expense ($2,340 x 7/12) 1365 Prepaid Insurance 1365 5 Unearned Service Revenue ($28,000 x 1/4) 7000 Service Revenue 7000 6 Accounts Receivable 3735 Service Revenue 3735 7 Salaries and Wages Expense ($5,280 x 3/5) 3168 Salaries and Wages Payable 3168Related Questions
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