Question

a. Three-fourths of the work related to $13,000 cash received in advance is performed this period.
b. Wages of $11,000 are earned by workers but not paid as of December 31, 2016.
c. Depreciation on the company’s equipment for 2016 is $10,600.
d. The Office Supplies account had a $480 debit balance on December 31, 2015. During 2016, $5,596 of office supplies are purchased. A physical count of supplies at December 31, 2016, shows $610 of supplies available.
e. The Prepaid Insurance account had a $5,000 balance on December 31, 2015. An analysis of insurance policies shows that $2,200 of unexpired insurance benefits remain at December 31, 2016.
f. The company has earned (but not recorded) $650 of interest from investments in CDs for the year ended December 31, 2016. The interest revenue will be received on January 10, 2017.
f. The company has a bank loan and has incurred (but not recorded) interest expense of $2,500 for the year ended December 31, 2016. The company must pay the interest on January 2, 2017.

Required: For each of the above separate cases, prepare adjusting entries required for financial statements for the year ended (date of) December 31, 2016. (Assume that prepaid expenses are initially recorded in asset accounts and that fees collected in advance of work are initially recorded as liabilities.)

Answer 1

Adjusting entries :

Date	accounts & explanation	debit	credit
a	Unearned revenue (13000*3/4)	9750
	Service revenue		9750
	(To record revenue earned)
b	Wages expenses	11000
	Wages payable		11000
	(To record wages payable)
c	Depreciation expenses	10600
	Accumlated depreciation		10600
	(To record depreciation)
d	Supplies expenses	5466
	Supplies		5466
	(To record supplies expenses)
e	Insurance expenses	2800
	Prepaid insurance		2800
	(To record prepaid insurance adjusted)
f	Interest receivable	650
	Interest revenue		650
	(To record interest revenue)
f	Interest expenses	2500
	Interest payable		2500
	(To rcord interest expenses)