Adjusting Entries-Accruals}

Nichols Company had the following items that required adjustment at December 31, 2018.

a. Electricity used during December was estimated to be \(\$ 320\). This amount will be paid in January.

b. Owed wages to employees of \(\$ 3,250\) that were earned in December but unrecorded and unpaid as of the end of the year.

c. Service revenue of \(\$ 4,900\) was earned in December but unbilled and unpaid as of year-end.

\section*{Required:}

1. Prepare the adjusting entries needed at December 31 .

2. CONCEPTUAL CONNECTION What is the effect on the financial statements if these adjusting entries were not made?

Brief Exercise