Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

E4-9 (Algo) Determining Accounting Equation Effects of Typical Adjusting Journal Entries [LO 4-2, LO 4- 6] Jaworski's Ski Store is completing the accounting process

image text in transcribedimage text in transcribed

E4-9 (Algo) Determining Accounting Equation Effects of Typical Adjusting Journal Entries [LO 4-2, LO 4- 6] Jaworski's Ski Store is completing the accounting process for its first year ended December 31, 2021. The transactions during 2021 have been journalized and posted. The following data are available to determine adjusting journal entries: a. The unadjusted balance in Supplies was $990 at December 31, 2021. The unadjusted balance in Supplies Expense was $0 at December 31, 2021. A year-end count showed $170 of supplies on hand. b. Wages earned by employees during December 2021, unpaid and unrecorded at December 31, 2021, amounted to $4,400. The last paychecks were issued December 28; the next payments will be made on January 6, 2022. The unadjusted balance in Salaries and Wages Expense was $47,000 at December 31, 2021. c. A portion of the store's basement is now being rented for $1,800 per month to K. Frey. On November 1, 2021, the store collected six months' rent in advance from Frey in the amount of $10,800. It was credited in full to Deferred Revenue when collected. The unadjusted balance in Rent Revenue was $0 at December 31, 2021. d. The store purchased delivery equipment at the beginning of the year. The estimated depreciation for 2021 is $2,700, although none has been recorded yet. e. On December 31, 2021, the unadjusted balance in Prepaid Insurance was $3,280. This was the amount paid in the middle of the year for a two-year insurance policy with coverage beginning on July 1, 2021. The unadjusted balance in Insurance Expense was $670, which was the cost of insurance from January 1 to June 30, 2021. f. Jaworski's store did some ski repair work for Frey. At the end of December 31, 2021, Frey had not paid for work completed amounting to $820. This amount has not yet been recorded as Service Revenue. Collection is expected during January 2022. Required: For each of the transactions, indicate the amount and direction of effects of the adjusting journal entry on the elements of the accounting equation. (Enter any decreases to Assets, Liabilities, or Stockholders' Equity with a minus sign.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Financial Accounting

Authors: Fred Phillips, Robert Libby, Patricia Libby

4th edition

978-0073369709, 73369705, 78025370, 978-0077444846, 77444841, 978-0078025372

More Books

Students also viewed these Accounting questions

Question

Describe what is meant by the minimum expected cost principle.

Answered: 1 week ago