Question

Adjusting entries:

1. Depreciation expense must be recorded for the year.
2. A count of the supplies inventory indicates that there are $500 in supplies remaining.
3. An inventory count indicates that there are 16,500 units of merchandise inventory in usable condition.
4. Prepaid rent should be adjusted to the correct balance at Dec 31.
5. Prepaid insurance should be adjusted to the correct balance at Dec 31.
6. Prepaid Security Services should be adjusted
7. You receive the phone and water bills but will not pay them until January 2020. The bills $400 for phone and $200 for water.
8. The bank statement shows that you earned $500 in interest for the year.
1. You calculate and accrue the interest due to the bank, which you will pay on January 2.

Answer 1

a) there are two type or depreciation - physical and functional depreciation

physical depreciation results from wear and tear due to frequent uses or exposure  to element.

functional depreciation is happen when an assets inadequate for its purpose.

How to record depreciation expenses:

Depreciation expenses is recorded by debiting the Depreciation expenses account and crediting the Accumulated Depreciation account

b) adjusting entry is:

Debiting the Supplies expenses account and crediting the Supplies account.

c) adjusting entry is:

Merchandise inventory account debit

To Cost of goods sold account

d) adjusting entry is:

Here's the rule, to begin posting journal entry for prepaid expenses, first debit an whatever account you used to pay and crediting the prepaid expenses account.

Debiting the rent account and crediting the prepaid rent account.

e) adjusting entry is:

Debiting the insurance expenses and crediting the prepaid insurance account.

f) adjusting entry is:

Debiting the security service account and crediting the prepaid security servises.

g) adjusting entry is:

Here's the rule. if a company incurred, used, or consumed all or part of an expenses, that expenses or part of that expenses should be properly recognized even if it has not been paid.

Phone bill account debit $400

water bill account account debit $200

To Bill Payable account    $600

h) adjusting entry is:

here's the rule, all the income earned during the year should be recorded whether or not that are received.

Accrued interest income account debit $500

To interest income account $500

i) adjusting entry is:

here's the rule, all the expenses incurred during the year should be recorded whether or not that are paid.

interest expenses account debit

To interest expenses payable account