Question

Journalize the adjusting entry needed on December 31, 2020 the company’s year end, for each of the following independent cases. Adjusting entries are only made on December 31 in this company.

1. Details of the Prepaid Rent Expense account are shown:

	prepaid rend
Jan. 1 Bal	4500
Mar. 31	9000
Sept. 30	9000

The company pays office rent semi-annually on March 31 and September 30. At December 31, part of the last payment is still available to cover January to march of the next year. No rent expense has been recorded for the year yet.

Date	Account name & description	Debit	Credit

2. The company pays its employees each Friday. The amount of the weekly payroll is $12,500 for a five day work week. December 31 is on a Wednesday, the employees will be paid on Friday, January 2.

3. The company purchased equipment on March 1, 2020 for $120,000. The equipment has a useful life of 5 years and a residual value of $0. No depreciation has been recorded yet this year.

4. On May 1 the company received $36,000 for services to be provided from May 1, 2020 to April 30, 2021. The company provided its services from May 1-December 31, 2020.

5. The company provided services valued at $15,000 for a customer in December but has not yet sent out a bill or received any cash.

6. The beginning balance of Supplies on January 1, 2020 was $6,400. During 2019 the company purchased supplies costing $18,200. On December 31, 2020, there were $8,000 worth of supplies remaining.

Answer 1

	Date	Account name & description	Debit	Credit
a.	Dec 31	Rent Expense	4,500
		Prepaid Rent		4,500
b.	Dec 31	Salaries & Wages Expense	7,500
		Cash		7,500
		(12,500 x 3/5)
c.	Dec 31	Depreciation Expense	20,000
		Accumulated Depreciation		20,000
		(120,000 - 0)/5 Years x 10/12
d.	Dec 31	Unearned Service Revenue	24,000
		Service Revenue		24,000
		(36,000 x 8/12)
e.	Dec 31	Accounts Receivable	15,000
		Service Revenue		15,000
f.	Dec 31	Supplies Expense	16,600
		Supplies		16,600
		(6,400 + 18,200 - 8,000)