Question

In: Accounting

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.
  

Solutions

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)

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