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 $7,000 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 $1,890 of unexpired insurance coverage remains. The Office Supplies account had a $500 debit balance on December 31, 2016; and $2,680 of office supplies were purchased during the year. The December 31, 2017, physical count showed $590 of supplies available. Three-fourths of the work related to $13,000 of cash received in advance was performed this period. The Prepaid Insurance account had a $5,200 debit balance at December 31, 2017, before adjusting for the costs of any expired coverage. An analysis of insurance policies showed that $3,310 of coverage had expired. Wage expenses of $5,000 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

ANSWER :-

a)

Depreciation on the company's equipment for 2017 is computed to be $12,000.
Debit Depreciation Expense -- Equipment $12,000
Credit Accumulated Depreciation -- Equipment $12,000

b)

The Prepaid Insurance account had a $7,000 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 $1,890 of unexpired insurance coverage remains

Adjustment = $7000 - $1890 = $5110

Debit Insurance Expense - $5110
Credit Prepaid Insurance - $5110

c)

The Office Supplies account had a $500 debit balance on December 31, 2016; and $2,680 of office supplies were purchased during the year. The December 31, 2017, physical count showed $590 of supplies available.

Adjustment = $500 + $2680 - $590 = $2590

Debit supplies expense = $2590

credit supplies = $2590

d)

Three-fourths of the work related to $13,000 of cash received in advance was performed this period.

= 3/4 * 13000

= $9750

Debit Unearned Revenue - $9750
Credit Fees Earned - $9750

e)

The Prepaid Insurance account had a $5,200 debit balance at December 31, 2017, before adjusting for the costs of any expired coverage. An analysis of insurance policies showed that $3,310 of coverage had expired.

Debit Insurance expense - $3310

credit prepaid insurance - $ 3310

f) Wage expenses of $5,000 have been incurred but are not paid as of December 31, 2017.

Debit Wages Expense - $5000
Cr Wages Payable - $5000

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