P3.5A (LO 2, 3) AP Devin Wolf Company has the following balances in selected accounts on December 31, 2021. Devin has a calendar year end.

Prepare adjusting entries and subsequent cash payments.

Accounts Receivable $0

Accumulated DepreciationEquipment 0

Equipment 7,000

Interest Payable 0

Notes Payable 10,000

Prepaid Insurance 2,100

Salaries Payable 0

Supplies 2,450

Unearned Revenue 30,000

All the accounts have normal balances. The information below has been gathered at December 31, 2021.

Devin Wolf Company borrowed $10,000 by signing a 4%, one-year note on September 1, 2021.

A count of supplies on December 31, 2021, indicates that supplies of $900 are on hand.

Depreciation on the equipment for 2021 is $1,000.

Devin Wolf Company paid $2,100 for 12 months of insurance coverage on June 1, 2021.

On December 1, 2021, Devin Wolf collected $32,000 for consulting services to be performed evenly from December 1, 2021, through March 31, 2022.

Devin Wolf performed consulting services for a client in December 2021. The client will be billed $4,200. Payment from the customer is expected on January 14, 2022.

Devin Wolf Company pays its employees total salaries of $9,000 every Wednesday for the preceding five-day week (Monday through Friday). On Wednesday, January 5, 2022, employees were paid for the last five weekdays of 2021.

Instructions

a. Prepare adjusting entries for the seven items above.

b. Prepare the appropriate subsequent cash entries if applicable.

Taking It Further During the year, the employees at Devin Wolf did not track the supplies they used. Explain how the supplies expense for the year can be determined even though detailed usage records were not kept.