Question

Make your own Journal Entries (debits & credits) for the following typical type of adjustments to accounts (use your own numbers):
1) adjust a co's Prepaid Insurance account at year-end
2) recognize an accrued Liability and corresponding Expense at year-end
3) recognize Depreciation Exp at year-end
4) adjust a co's Unearned Revenue account at year-end
Note: include explanations with your adjusting entries, please be specific

Answer 1

Journal

Date	General Journal	Debit	Credit
1.	Insurance expense	6,000
	Prepaid insurance		6,000
	( To record insurance expense)
2.	Salaries expense	1,000
	Salaries payable		1,000
	( To record salaries payable)
3.	Depreciation expense	2,000
	Accumulated depreciation - Equipment		2,000
	( To record depreciation expense)
4.	Unearned revenue	10,000
	Service revenue		10,000
	( To record service revenue earned)

1. Insurance of $12,000 was paid for 1 year on July 1. Hence insurance expense of the current year = 12000 x 6/12 = $6,000

2. Salaries of $1,000 were not paid on December 31.

3. Equipment costing $10,000 has a useful life of 5 years.

Annual depreciation on equipment = 10,000/5

= $2,000

4. Service revenue of $10,000 was received in advance on November 1, for which service were provided at the end of one year.

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