Question

Prepare adjusting entries from selected data:

Devin Wolf company has the following balances in selected accounts on december 31,2020

Accounts Receivable $–0–

Accumulated Depreciation—Equipment –0–

Equipment 7,000 Interest Payable –0–

Notes Payable 10,000

Prepaid Insurance 2,100

Salaries and Wages Payable –0–

Supplies 2,450

Unearned Service Revenue 32,000

All the accounts have normal balances. The information below has been gathered at December 31, 2020.

1. Devin Wolf Company borrowed $10,000 by signing a 9%, one-year note on September 1, 2020.

2. A count of supplies on December 31, 2020, indicates that supplies of $900 are on hand.

3. Depreciation on the equipment for 2020 is $1,000.

4. Devin Wolf Company paid $2,100 for 12 months of insurance coverage on June 1, 2020.

5. On December 1, 2020, Devin Wolf collected $32,000 for consulting services to be performed from December 1, 2020, through March 31, 2021.

6. Devin Wolf performed consulting services for a client in December 2020. The client will be billed $4,200.

7. Devin Wolf Company pays its employees total salaries of $9,000 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 2020.

Instructions: Prepare adjusting entries for the seven items described above.

Answer 1

Adjusting entry :

No	Account and explanation	debit	credit
1	Interest expense (10000*9%*4/12)	300
	Interest payable		300
	(To record accured interest)
2	Supplies expense (2450-900)	1550
	Supplies		1550
	(To record supplies adjusted)
3	Depreciation expense	1000
	Accumlated depreciation-equipment		1000
	(To record depreciation expense)
4	Insurance expense (2100/12*7)	1225
	Prepaid insurance		1225
	(To record insurance expense)
5	Unearned revenue (32000*1/4)	8000
	Service revenue		8000
	(To record service revenue)
6	Account receivable	4200
	Service revenue		4200
	(To record service revenue)
7	Salary and wages expense (9000/5*3)	5400
	Salary and wages payable		5400
	(To record accured salary and wages)