Question

In: Accounting

Part Two Instructions Once all journal entries are recorded in the practice set, record the eight...

Part Two Instructions Once all journal entries are recorded in the practice set, record the eight adjusting journal entries below and round to the nearest cent if necessary. The following are the adjusting journal entries for the month of January. Record all adjusting entries on January 31, 2020. Record Adjusting Entries: Record the following month end adjusting entries for the month of January. Write the journal entries in the practice set after the original journal entries. Round all answers to the nearest cent.

a. $70 of office supplies remained on hand.

b. $200 of shipping supplies remained on hand.

c. $1,300 of wages for the part-time help from Irene’s Temp Services for January should be accrued. Do not worry about payroll taxes; Temp Services Inc. will handle these.

d. Make the necessary adjusting entries for one month’s depreciation for the Computer Equipment using Straight Line Depreciation.

e. Make the necessary adjusting entry for one month’s depreciation for the furniture and fixtures using Straight Line Depreciation.

f. One month of the prepaid insurance has expired.

g. One month of the prepaid rent has expired.

h. Record the interest for the loan from Wells Fargo for one month. Make sure you prepare the journal entries and the adjusting entries and write them in the practice set.

Solutions

Expert Solution

Note: Since many of the figures have not been given in the problem, in solving the problem I have endeavored to explain how the amount of the adjusting entry is to be calculated, giving the adjusting entries to be passed and the necessary narration thereof.

a. $70 of office supplies are on hand. Hence, the balance of Office Supplies A/C needs to be brought down to  $70. The amount of Balance in Office Supplies A/C - $70 will be the amount of Office Supplies Expense for which adjusting entry needs to be passed as below:

January 31, 2020 Dr. Office Supplies Expense A/C (Amount as calculated above)

Cr. Office Supplies A/C   (Amount as calculated above)

(To record office supplies consumed during the year)

b. $200 of shipping supplies remained on hand. Hence, the balance of Shipping Supplies A/C needs to be brought down to  $200. The amount of Balance in Shipping Supplies A/C - $200 will be the amount of Shipping Supplies Expense for which adjusting entry needs to be passed as below:

January 31, 2020 Dr. Shipping Supplies Expense A/C (Amount as calculated above)

Cr. Shipping Supplies A/C   (Amount as calculated above)

(To record shipping supplies consumed during the year)

c. $1,300 of wages for the part-time help from Irene’s Temp Services for January should be accrued. The adjusting entry needs to be passed as below:

January 31, 2020 Dr. Wage Expenses 1300

Cr. Wage Expenses Payable A/C 1300

(To record wages outstanding for the part-time help from Irene’s Temp Services for January 2020 )

d. The adjusting entries for one month’s depreciation for the Computer using Straight Line Depreciation:  The depreciation as per Straight Line method to be calculated by using the formula (Equipment Cost - Residual Value) / Useful Life of the computer. This will give depreciation for one whole year. Divide the figure by 12 to get the monthly depreciation.The adjusting entries for depreciation for January 2020 will be:

January 31, 2020 Dr. Depreciation Expense A/C   (Amount as calculated above)

Cr, Accumulated Depreciation on Computer Equipment   (Amount as calculated above)

  (To record monthly depreciation on Computer Equipment for the month of January 2020)

e. Adjusting entry for one month’s depreciation for the furniture and fixtures: The procedure for calculating depreciation as per Straight Line method is the same as explained in the previous step.  The adjusting entries for depreciation for January 2020 will be:

January 31, 2020 Dr. Depreciation Expense A/C   (Amount as calculated above)

Cr, Accumulated Depreciation on Furniture and Fixtures (Amount as calculated above)

  (To record monthly depreciation on furniture and fixtures for the month of January 2020)

f. One month of the prepaid insurance has expired: Calculate the amount of prepaid insurance expired prorata for one month by dividing the prepaid insurance account balance by the number of months for which the prepaid insurance benefit is available at the beginning of January 2020. The adjusting entries for prepaid insurance  for January will be:

January 31, 2020 Dr. Insurance Expense A/C   (Amount as calculated above)

Cr. Prepaid Insurance A/C   (Amount as calculated above)

   (To record insurance expense for the month of January 2020)

g. One month of the prepaid rent has expired: Calculate the amount of prepaid rent expired prorata for one month by dividing the prepaid rent account balance by the number of months for which the prepaid rent benefit is available at the beginning of January 2020. The adjusting entries for prepaid rent for January will be:

January 31, 2020 Dr. Rent Expense A/C   (Amount as calculated above)

Cr. Prepaid Rent A/C   (Amount as calculated above)

   (To record rent expense for the month of January 2020)

h. Record the interest for the loan from Wells Fargo for one month: Calculate the interest payable on the loan for one month and pass the adjusting entries for interest payable for January as below:

January 31, 2020 Dr. Interest Expense A/C   (Amount as calculated above)

Cr. Interest Payable A/C   (Amount as calculated above)

   (To record interest payable on the loan from Wells Fargo  for the month of January 2020)


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