Wages of $8,000 are earned by workers but not paid as of December 31, 2017. Depreciation...

Wages of $8,000 are earned by workers but not paid as of December 31, 2017.

Depreciation on the company’s equipment for 2017 is $18,000.

The Office Supplies account had a $240 debit balance on December 31, 2016. During 2017, $5,200 of office supplies are purchased. A physical count of supplies at December 31, 2017, shows $440 of supplies available.

The Prepaid Insurance account had a $4,000 balance on December 31, 2016. An analysis of insurance policies shows that $1,200 of unexpired insurance benefits remain at December 31, 2017.

The company has earned (but not recorded) $1,050 of interest from investments in CDs for the year ended December 31, 2017. The interest revenue will be received on January 10, 2018.

The company has a bank loan and has incurred (but not recorded) interest expense of $2,500 for the year ended December 31, 2017. The company must pay the interest on January 2, 2018.

For each of the above separate cases, prepare adjusting entries required of financial statements for the year ended (date of) December 31, 2017.

Expert Solution

Adjusting entry

date	account and explanation	debit	credit
Dec 31	Wages expense	8000
	Wages payable		8000
	(To record wages accrued)

Dec 31	Depreciation expense	18000
	Accumulated depreciation-equipment		18000
	(To record dep)

Dec 31	Supplies expense (240+5200-440)	5000
	Supplies		5000
	(To record supplies )

Dec 31	Insurance expense (4000-1200)	2800
	Prepaid insurance		2800
	(To record insurance expense)

Dec 31	Interest receivable	1050
	Interest revenue		1050
	(To record interest)

Dec 31	Interest expense	2500
	Interest payable		2500
	(To record accrued interest)

ekkarill92 answered 2 years ago

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