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Exercise 3-5 Monty Corp. has the following balances in selected accounts on December 31, 2019. Accounts...

Exercise 3-5 Monty Corp. has the following balances in selected accounts on December 31, 2019. Accounts Receivable $ 0 Accumulated Depreciation—Equipment 0 Equipment 8,000 Interest Payable 0 Notes Payable 9,800 Prepaid Insurance 3,180 Salaries and Wages Payable 0 Supplies 2,100 Unearned Service Revenue 28,000 All the accounts have normal balances. The information below has been gathered at December 31, 2019. 1. Monty Corp. borrowed $9,800 by signing a 12%, one-year note on September 1, 2019. 2. A count of supplies on December 31, 2019, indicates that supplies of $950 are on hand. 3. Depreciation on the equipment for 2019 is $1,600. 4. Monty Corp. paid $3,180 for 12 months of insurance coverage on June 1, 2019. 5. On December 1, 2019, Monty Corp. collected $28,000 for consulting services to be performed from December 1, 2019, through March 31, 2020. 6. Monty Corp. performed consulting services for a client in December 2019. The client will be billed $4,000. 7. Monty Corp. pays its employees total salaries of $7,000 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 2019. Prepare adjusting entries for the seven items described above.

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Answer #1
Date Account title Debit credit
December 31,2019
1 Interest expense 392
Interest payable 392
[Being interest accrued for 4 months (1Sept- 31Dec) :9800*.12*4/12=392]
2 Supplies expense 1150
Supplies 1150
[Being supplies used :2100-950 =1150]
3 Depreciation expense 1600
Accumulated depreciation-equipment 1600
4 Insurance expense 1855
Prepaid insurance 1855
[Being insurance expired for 7 months (1June-31dec) = 3180*7/12=1855]
5 Unearned service revenue 7000
service revenue 7000
[Being service revenue earned for a month (1Dec-31Dec) out of 4months period (Dec-mar):28000*1/4=7000]
6 Accounts receivable 4000
service revenue 4000
7 Salaries and wages expense 4200
Salaries and wages payable 4200
Being salaries accrued for 3 days out of 5days week period : 7000*3/5=4200]
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