Question

Prepare general journal entries on December 31 to record the following unrelated year-end adjustments.

a. Estimated depreciation on office equipment for the year, SAR 2,000

b. The Prepaid Insurance account has a SAR 2,500 debit balance before adjustment. An examination of insurance policies shows SAR 350 of insurance expired

c. The Prepaid Insurance account has a SAR 1,400 debit balance before adjustment. An examination of insurance policies shows SAR 400 of unexpired insurance

d. The company has three office employees who each earn SAR200 per day for a five-day workweek that ends on Friday. The employees were paid on Friday, December 26 and have worked full days on Monday, Tuesday and Wednesday, December 29, 30 and 31.

Answer 1

a	Date	Accounts title and explanation	Debit (SAR)	Credit (SAR)
	Dec 31	Depreciation Expense	2,000
		Accumulated Depreciation - Office Equipment		2,000
		(Depreciation on office equipment recorded)
b	Date	Accounts title and explanation	Debit (SAR)	Credit (SAR)
	Dec 31	Insurance Expense	350
		Prepaid Insurance		350
		(Prepaid insurance of SAR 350 expired and insurance expense recoded for the same)
c	Date	Accounts title and explanation	Debit (SAR)	Credit (SAR)
	Dec 31	Insurance Expense	1,000
		Prepaid Insurance		1,000
		(Prepaid insurance of SAR 400 unexpired i.e. SAR 1000 insurance is expired and insurance expense recoded for the same)
d	Date	Accounts title and explanation	Debit (SAR)	Credit (SAR)
	Dec 31	salary and wage expense	1,800
		salary and wage payable		1,800
		(since three employee earns 200 per day each i.e. SAR 600 per day is due and for 3 days it becomes SAR 600 x 3 days = SAR 1,800 payable)