Journalize the adjusting entry need on December 31, 2010 the end of the current

Question

Journalize the adjusting entry need on December 31, 2010 the end of the current accounting period, for each of the following independent cases affecting Bulova Engineering, Inc. (BED: A. Each Friday, BEI pays employees for the current week's work. The amount of the payroll is $ 2,500 for a 5-day work week. The current accounting period ends on Monday B. BEI has notes payable at a local bank. During the current year, BEI has accrued interest expense of S 2,640, which will be paid next year. The beginning balance of Engineering Supplies was S 1,800. During the year, the entity purchased supplies costing S12,530, and December 31 the inventory of supplies on hand is S 2,970. C. D. BEI is conducting tests of the strength of the steel to be used in a large building, and the client paid BEI S 36,000 at the start of the project. BEI recorded this amount as Unearned Engineering Revenue. The test will take several months to complete. BEI executives estimate that the company has earned three-fourths of the total fee during the current year. E. Depreciation for the current year includes Engineering Equipment, S 6,360; and Building, $ 3,790. BEI pays the annual insurance premium (the payment for insurance coverage is called a premium) on April 30 each year. On January 1, the prepaid insurance account has a balance of S600 which relates to the insurance coverage from January 1-April 30, 2010. A new $2,400 policy was purchased on April 30, 2010 for insurance coverage from May 1, 2010 to April 30, 2011. The T-account reflecting that information is shown below. F. PREPAID INSURANCE 2,400

Explanation / Answer

Dear student

Simply remember these rules 1.when ever you record an expense it should be debited like

Wages a/c Dr 5000

To Cash 5000

as the above credit all incomes

Asset will always have a debit balance..to increase the value of asset you should debit it ..if you want to depreciate the you should Debit depreacition a/c as it is an expense and it shoudl be adjusted to Asset i.e credit to Asset a/c reducingf the value of asset

A.As year ending was on monday only day is falling under this year and this will be paid only on friday afyter the current financial year so that amout payble for monday should be kept as Outstanding expense /wages payable and the entry is

Wages a/c (2500/5) Dr 500

To Wages Payable a/c 500

B. Here also expense is relating to current year but not paid during the year

so we should create a liabilty for the payable interest

Interest a/c Dr 2640

To Interest Payable a/c 2640

C. Inventory account Dr 2970

To Cost of goods sold account 2970

this entry creates closing inventory as asset

D. As company estiates 3/4 of the revenue is attained during the year such amount should be recorded as income during the year and it should reduced from the unearned revenue income a/c

the entry is  

unearned Engeneering revenue a/c (36000/4*3) Dr 27000.

To Income from Engeneering a/c 27000

As no further info given 36000 is assumed as total fee

For Depreciation as explained above entry is as follows

Depreciationa/c Dr 10150

To Engeering equpiment a/c 6360

To Building a/c 3790

Insurance is paid upto aptrl 30 i.e excess of 4 months in prior is paid so that amount should be kept as asset in books of account for the financial year ending

Prepaid Insurance a/c Dr 800

To insurance a/c 800

i.e 2400/12=200 per month i.e 200*4=800

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