Part 1. Information to Make Necessary Adjusting Entries The following transaction information relates to Ensley, Inc. as of December 31, 2020. The company uses the calendar year as its annual reporting period and the Accrual Method of Accounting. They initially record prepaid and unearned items in balance sheet accounts (assets and liabilities, respectively). Prepare all necessary adjusting journal entries and post to the T-Accounts (see tab below) A. The company's weekly payroll is $2,500 and is paid each Friday for a five-day workweek. Assume December 31st falls on a Wednesday, but the employees will not be paid their wages until Friday. January 2 of the following year B. Eighteen months earlier, on July 1st the company purchased equipment that cost $160,000. Its useful life is predicted to eight years, at which time the equipment is expected to be worthless (zero salvage value). Gatsby, Inc. uses the straight-line depreciation method, which has NOT been recorded for this year 12 13 14 15 16 17 On October 1st of the current year Gatsby, Inc. was paid $28,000 in advance of future installation of alarm systems in 4 new homes. The amount was credited to the Unearned Revenue- Alarms account. Between October 1st and December 31st alarm systems were installed in 2 homes, completing those jobs C. 18 D. On Sept 1st of the current year the company purchased a 12-month insurance policy for $24,000. The transaction 19 20 21 was recorded with a debit to the Prepaid Insurance account. Insurance expense has not been recorded for September, October, November or December On December 30 of the current year the company completed an $18,000 job that has not been billed/invoiced and therefo has not been recorded. E. 23 24 A $100,000 long-term note payable was signed on September 1st of the current year. It is a five-year note with a7.5% interest rate. Interest expense as not been accrued for this year F. 26 G. 29 30 Supplies at the beginning of the current year had a balance of $ 200. Supplies valued at $4,100 were purchased thoughout the year. The current balance in the account is $700. Calculate the amount of supplies used and record the adjusting entry needed to update the account. Info & UnAdjusted Trial Balance T-accounts Adjusting Journal Entries Adjusted Trial Balance Inco 23 24 25 26 27 28 Cash 29 Accounts Receivable 30 Prepaid Insurance 31 Supplies 32 Inventory 33 Equipment 34 Accumlated Depreciation- Equipment 35 Accounts Payable 36 Interest Payable 37 Wages Payable 38 Unearned Revenue- Alarm Systems 39 Long-Term Bank Note Payable 40 Common Stock 41 Retained Earnings 42 Dividends 43 Revenue 44 Cost of the Goods Sold 45 Depreciation Expense- Equipment 46 Insurance Expense Ensley, Inc. Unadjusted Trial Balance December 31, 2020 215 24,000 4,300 78,000 160,000 10,000 159,500 0 28,000 100,000 110,000 94,550 7,000 132,500 9,000 386,000 47 Interest Expense 48 Rent Expense 49 Supplies Expense 50 Utilities Expense 51 Wage Expense 52 Totals 53 24,000 0 8,700 130,000