Question

1. Depreciation on the company's equipment for the year is computed to be $12,000.
2. The Prepaid Insurance account had a $7,000 debit balance at December 31 before adjusting for the costs of any expired coverage. An analysis of the company’s insurance policies showed that $1,930 of unexpired insurance coverage remains.
3. The Office Supplies account had a $520 debit balance at the beginning of the year; and $2,680 of office supplies were purchased during the year. The December 31 physical count showed $614 of supplies available.
4. One-fourth of the work related to $11,000 of cash received in advance was performed this period.
5. The Prepaid Rent account had a $5,900 debit balance at December 31 before adjusting for the costs of expired prepaid rent. An analysis of the rental agreement showed that $3,970 of prepaid rent had expired.
6. Wage expenses of $5,000 have been incurred but are not paid as of December 31.

Prepare adjusting journal entries for the year ended (date of) December 31 for each of these separate situations.

Answer 1

Date	Accounts Titles & Explanation	Debit	Credit
31-Dec	Depreciation Expense	12,000
	Accumulated Depreciation - Equipment		12,000
	( recording depreciation expense )
31-Dec	Insurance Expense [7,000 - 1,930]	5,070
	Prepaid Insurance		5,070
	( recording insurance expenses )
31-Dec	Office Supplies Expense [520 + 2,680 - 614]	2,586
	Office Supplies		2,586
	( recording office supplies expenses )
31-Dec	Unearned Service Revenue [11,000 / 4]	2,750
	Service Revenue		2,750
	( recording service revenue )
31-Dec	Rent Expenses	3,970
	Prepaid Rent Expenses		3,970
	( recording rent expenses )
31-Dec	Wage Expenses	5,000
	Wages Payable		5,000
	( recording wage expenses )

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