Question

CREATE ADJUSTING JOURNAL ENTRIES FOR JANUARY 31, 2018:

p. Record the January 2018 depreciation for all computers & software owned before the January 1 purchase. These items are being depreciated over 5 years using the straight-line method with no salvage value. q. Record the January 2018 depreciation for the furniture & fixtures. These items are being depreciation over 7 years using the straight-line method with no salvage value. r. Record the adjusting entry for January’s rent. Sunflower Designs paid $2,100 in advance for 6 months’ rent on December 1, 2017. All previous months’ adjusting entries were made as required. s. Record the adjusting entry to record the use of the prepaid insurance coverage in January. The amount of the expired insurance coverage was $200. The previous months’ adjusting entries were made as required. t. Record the amount due to an employee for time worked during January, but not paid. The amount earned by the employee was $3,170.

Answer 1

Please find below the adjusting entries -

Note 1 - The depreciation entry is booked assuming that the Accumulated depreciation account is not being maintained. If It is assumed to be maintained then the entry would be different. In that case, accumulated depreciation account will be credited instead of Asset account and then accumulated depreciation will be shown in Balance sheet deducting from the Assets account. The entry would be as follows -

Depreciation A/c   Dr.

Accumulated Depreciation A/c Cr.

Note 2 - For charging rent from prepaid rent - When the rent had been paid in December that time Prepaid rent was debited and cash was credited. Now - we need to transfer the rent from prepaid rent every month. To charge - Rent account is debited and Prepaid rent is credit so that it gets reduced every month. 2,100 is paid for 6 months hence monthly rent is 2100/6 = 350

Note 3 - Same case is with Insurance charge from prepaid insurance.

Note 4 - Payable to employee - Wages is payable for January. Wages is an expense hence it is debited as an expense and it is outstanding as of Jan 31 hence would be shown as payable in the credit side of Balance sheet.