Prepare adjusting journal entries for the year ended tor date of) December 31, 2005, for each of
Question:
Prepare adjusting journal entries for the year ended tor date of) December 31, 2005, for each of these separate situations. Assume that prepaid expenses are initially recorded in asset accounts. Also assume that fees collected in advance of work are initially recorded as liabilities.
a. Depreciation on the company’s equipment for 2005 is computed to be \($16,000\).
b. The Prepaid Insurance account had a \($7,000\) debit balance at December 31, 2005, before adjusting for the costs of any expired coverage. An analysis of the company’s insurance policies showed that \($1,040\) of unexpired insurance coverage remains.
c. The Office Supplies account had a \($300\) debit balance on December 31, 2004; and \($2,680\) of office supplies was purchased during the year. The December 31, 2005, physical count showed \($354\) of supplies available.
d. One-half of the work related to \($10,000\) cash received in advance was performed this period.
e. The Prepaid Insurance account had a \($5,600\) debit balance at December 31, 2005, before adjusting for the costs of any expired coverage. An analysis of insurance policies showed that \($4,600\) of coverage had expired.
f. Wage expenses of \($4,000\) have been incurred but are not paid as of December 31, 2005.
Step by Step Answer:
Fundamental Accounting Principles
ISBN: 9780072946604
17th Edition
Authors: Kermit D. Larson, John J Wild, Barbara Chiappetta