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Financial & Managerial Accounting
Found in: Page 145
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Prepare adjusting journal entries for the year ended (date of) December 31, 2017, for each separate situation.

(Entries can draw from the following partial chart of accounts: Cash; Accounts Receivable; Supplies;

Prepaid Insurance; Equipment; Accumulated Depreciation—Equipment; Wages Payable; Unearned Revenue;

Revenue; Wages Expense; Supplies Expense; Insurance Expense; Depreciation Expense—Equipment.)

a. Depreciation on the company’s equipment for 2017 is computed to be $18,000.

b. The Prepaid Insurance account had a $6,000 debit balance at December 31, 2017, before adjusting for

the costs of any expired coverage. An analysis of the company’s insurance policies showed that $1,100

of unexpired insurance coverage remains.

c. The Office Supplies account had a $700 debit balance on December 31, 2016; and $3,480 of office

supplies were purchased during the year. The December 31, 2017, physical count showed $300 of supplies

available.

d. Two-thirds of the work related to $15,000 of cash received in advance was performed this period.

e. The Prepaid Insurance account had a $6,800 debit balance at December 31, 2017, before adjusting for the

costs of any expired coverage. An analysis of insurance policies showed that $5,800 of coverage had expired.

f. Wage expenses of $3,200 have been incurred but are not paid as of December 31, 2017.

The salaries expense account is debited and salaries payable credited with $3,200.

See the step by step solution

Step by Step Solution

Step 1: Definition of salaries payable

When the salary amount is due, the payment is not made known as salaries payable.

Step 2: Adjusting entry for salary payable

Journal entry

Date

Particulars

Debit

Credit

December 31, 2017

Salaries Expense

$3,200

Salaries Payable

$3,200

(Adjusting entry for the revenue received in advance)

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