Question

REQUIREMENT #4

Okay, I have a case study I need to complete by the end of this week but I am stuck. Plus, I need to make sure that I am doing this correctly. It is a layered challenge. I will have to send the study in pieces because I could not attach the actual document.   

Prepare adjusting entries using the following information in the General Journal                              
below. Show your calculations!                              
                              
a) One month's insurance has expired.                              
                              
b) The remaining inventory of supplies is $400.                              
                              
c) The estimated depreciation on equipment is $125.                              
                              
d) The estimated income taxes are $3,000.                              
                              
       General Journal                      
Date   Description (Account Name)           Debit   Credit          
                              

During its first month of operation, the Quick Tax Corporation, which specializes in tax preparation,                                              
completed the following transactions.                                              
                                              
July 1   Began business by making a deposit in a company bank account of $60,000, in exchange                                          
   for 6,000 shares of $10 par value common stock.                                          
                                              
July 3   Paid the current month's rent, $3,500                                          
                                              
July 5   Paid the premium on a 1-year insurance policy, $4,200                                          
                                              
July 7   Purchased supplies on account from Little Company, $1,000.                                          
                                              
July 10   Paid employee salaries, $3,500                                          
                                              
July 14   Purchased equipment from Lake Company, $10,000. Paid $2,500 down and the balance was                                          
   placed on account. Payments will be $500.00 per month until the equipment is paid. The first payment is due 8/1.                                          
   Note: Use accounts payable for the balance due.                                          
                                              
July 15   Received cash for preparing tax returns for the first half of July, $8,000                                          
                                              
July 19   Made payment on account to Lake Company, $500.                                          
                                              
July 31   Received cash for preparing tax returns for the last half of July, $9,000                                          
                                              
July 31   Declared and paid cash dividends of $600.                                          

Answer 1

Adjusting entries are the entries made for adjusting the revenue and expenses for the period in which they are incurred. It is done at the end of the accounting period after preparing the unadjusted trail balance.

Date	Account title	Debit	Credit
July 31	Insurance Expense [$4200/12]	$350
	Prepaid Insurance		$350
	(To record insurance expense)
July 31	Supplies Expense [$1000-$400]	$600
	Supplies		$600
	(To record supplies expense)
July 31	Depreciation Expense	$125
	Accumulated Depreciation - Equipment		$125
	(To record depreciation on equipment)
July 31	Income Tax Expense	$3,000
	Income Tax Payable		$3,000
	(To record income tax expense)