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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

Question: Prepare adjusting journal entries for the year ended (date of) December 31, 2017, for each of these separate situations.

(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 depreciation expense account is debited and accumulated depreciation credited with $18,000.

See the step by step solution

Step by Step Solution

Step-by-Step SolutionStep 1: Definition of depreciation

Depreciation means the decrease in the asset's value due to constant use.

Step 2: Adjusting entry for depreciation

Journal entry

Date

Particulars

Debit

Credit

December 31, 2017

Depreciation expense- Equipment

$18,000

Accumulated Depreciation

$18,000

(Adjusting entry for the depreciation)

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