Question

Craig Ferguson Company has the following balances in selected accounts on December 31, 2017.

Accounts Receivable $-0-

Accumulated Depreciation-Equipment 10,000

Interest Payable -0-

Notes Payable 20,000

Prepaid Insurance 2,700

Salaries and Wages Payable -0-

Supplies 3,500 Unearned

Service Revenue 50,000

All the accounts have normal balances. The information below has been gathered at December 31, 2017.

1. Craig Ferguson Company borrowed $20,000 by signing a 12%, one-year note on August 1, 2017.

2. A count of supplies on December 31, 2017, indicates that supplies of $900 are on hand.

3. Depreciation on the equipment for 2017 is $2,000.

4. Craig Ferguson Company paid $2,700 for 12 months of insurance coverage on May 1, 2017.

5. On November 1, 2017, Craig Ferguson collected $50,000 for consulting services to be performed from November 1, 2017, through March 31, 2018.

6. Craig Ferguson performed consulting services for a client in December 2017. The client will be billed $6,300.

7. Craig Ferguson Company pays its employees total salaries of $13,000 every Monday for the preceding 5-day week (Monday through Friday). On Monday, December 29, employees were paid for the week ending December 26. All employees worked the last 3 days of 2017.

Answer 1

Adjusting entries :

Date	account and explanation	debit	credit
Dec 31	Interest expense (20000*12%*5/12)	1000
	Interest payable		1000
	(To record interest payable)
Dec 31	Supplies expense (3500-900)	2600
	Supplies		2600
	(To record supplies adjusted)
Dec 31	Depreciation expense	2000
	Accumlated depreciation-equipment		2000
	(To record dep)
Dec 31	Insurance expense (2700/12*8)	1800
	Prepaid insurance		1800
	(To record insurance expense)
Dec 31	Unearned service revenue (50000*2/5)	20000
	Service revenue		20000
	(To record service revenue)
Dec 31	Account receivable	6300
	Service revenue		6300
	(To record service revenue)
Dec 31	Salaries and wages expense (13000/5*3)	7800
	Salaries and wages payable		7800
	(To record salaries and wages expense)