Question

1. Depreciation on the company's equipment for 2017 is computed to be $13,000.
2. The Prepaid Insurance account had a $9,000 debit balance at December 31, 2017, before adjusting for the costs of any expired coverage. An analysis of the company’s insurance policies showed that $850 of unexpired insurance coverage remains.
3. The Office Supplies account had a $460 debit balance on December 31, 2016; and $2,680 of office supplies were purchased during the year. The December 31, 2017, physical count showed $543 of supplies available.
4. Three-fourths of the work related to $13,000 of cash received in advance was performed this period.
5. The Prepaid Insurance account had a $4,900 debit balance at December 31, 2017, before adjusting for the costs of any expired coverage. An analysis of insurance policies showed that $4,050 of coverage had expired.
6. Wage expenses of $2,000 have been incurred but are not paid as of December 31, 2017.

Prepare adjusting journal entries for the year ended (date of) December 31, 2017, for each of these separate situations.

Answer 1

ADJUSTING ENTRIES

DATE	ACCOUNTS AND EXPLANATIONS	DEBIT	CREDIT
2017
DEC 31	DEPRECIATION EXPENSES - EQUIPMENT	$13,000
	ACCUMULATED DEPRECIATION- EQUIPMENT		$13,000
	(DEPRECIATION EXPENSES RECORDED)
DEC 31	INSURANCE EXPENSES (9,000 - 850)	$8,150
	PREPAID INSURANCE		$8,150
	(INSURANCE EXPIRED)
DEC 31	SUPPLIES EXPENSES	$2,597
	SUPPLIES		$2597
	(SUPPLIES USED FOR BUSINESS)
DEC 31	DEFERRED REVENUE(3/4 OF 13,000)	$9,750
	SERVICE REVENUE		$9,750
	(WORK PERFORMED FOR ADVANCE RECEIVED)
DEC 31	INSURANCE EXPENSES	$4,050
	PREPAID INSURANCE		$4,050
	(INSURANCE EXPIRED)
DEC 31	SALARIES AND WAGES EXPENSES	$2,000
	SALARIES AND WAGES PAYABLE		$2,000

CALCULATION OF SUPPLIES : $460 + $2680 - $543

= 2597