Question

Jan Spears opened her decorating company on January 1, 2008. During the first month of operations, the following transactions occurred:
(1) Performed services for country club clients. On January 31, $2,300 of such services was earned but not yet billed to the clubs.
(2) Utility expenses incurred but not paid prior to January 31 totaled $650.
(3) Purchased decorating supplies on January 1 for $50,000, paying $10,000 in cash and signing a $40,000, three-year note payable. Interest is $300 per month.
(4) Purchased a one-year fire insurance policy on January 1 for $6,000.
(5) Purchased a computer at $2,100. On January 31, determined that $200 of the computer had been depreciated.

Instructions: Prepare the adjusting entries on January 31. Account titles are: Accumulated Depreciation—Furniture, Depreciation Expense, Service Revenue, Accounts Receivable, Insurance Expense,

Interest Expense, Interest Payable, Prepaid Insurance, Supplies, Supplies Expense, Utilities Expense, and Utilities Payable.

Answer 1

Date- Jan 31	Particulars	Debit ($)	Credit ($)
1	Accounts receivable	2300
	Service revenue		2300
	(To record revenue earned)
2	Utility expense	650
	Utilities Payable		650
	(To record accrued expense)
3	Supplies	50,000
	Cash		10,000
	Notes payable		40,000
	(To record supplies purchased)
	Interest expense	300
	Interest payable		300
	(To record interest payable)
4	Prepaid insurance (11months) =6000/12*11	5500
	Insurance expense	500
	Cash		6000
	(To record insurance )
5.	Depreciation Expense	200
	Accumulated Depreciation—Furniture		200
	(To record depreciation)