Question

8) Zoom Inc.’s year-end is December 31. Give Zoom’s adjusting entries on that date for the following transactions:

1. Zoom employees have a 5-day work week (Monday through Friday). Weekly salary for all employees (in total) is $9,500. December 31 this year falls on a Monday.

2. Zoom earned $2,000 of consulting revenue in December, but the customer will not make payment on this amount until February.

3. On July 31, Zoom paid for 8 months of insurance coverage, $12,000, in advance. No adjustment has been made since.

4. In December, Zoom incurred $300 of repair expenses. The repair bill will be paid in January.

5. Zoom began the year with $1,000 of supplies. During the year, Zoom purchased another $800 of supplies. At December 31, Zoom has $250 of supplies on hand.

6. Zoom has computers with an original cost of $45,000. The computers are expected to have a 9-year life. No depreciation has been recorded yet for the year.

7. On October 31, a customer paid $6,000 in advance for 4 months of services (to be provided by Zoom evenly over the 4-month period). No adjustment has been made since.

Answer 1

Adjusting entries

No	Account and explanation	debit	credit
a	Wages expense (9500/5*1)	1900
	Wages payable		1900
	(To record accrued wages)
b	Account receivable	2000
	Consulting revenue		2000
	(To record consulting revenue)
c	Insurance expense (12000/8*5)	7500
	Prepaid insurance		7500
	(To record insurance expense)
d	Repairs expense	300
	Repairs payable		300
	(To record repairs expense)
e	Supplies expense (1000+800-250)	1550
	Supplies		1550
	(To record supplies expense)
f	Depreciation expense (45000/9)	5000
	Accumulated depreciation-Computer		5000
	(To record dep)
g	Unearned revenue (6000*2/4)	3000
	Revenue earned		3000
	(To record revenue)