Question

Verne Cova Company has the following balances in selected accounts on December 31, 2020. Accounts Receivable Accumulated Depreciation Equipment Equipment 7,000 Interest Payable Notes Payable 10,000 Prepaid Insurance 2,100 Salaries and Wages Payable Supplies 2,450 Unearned Service Revenue 30,000 All the accounts have normal balances. The information below has been gathered at December 31, 2020. 1. Verne Cova Company borrowed $10,000 by signing a 12%, one year note on September 1, 2020. 2. A count of supplies on December 31, 2020, indicates that supplies of $900 are on hand. 3. Depreciation on the equipment for 2020 is $1,000. 4. Verne Cova paid $2,100 for 12 months of insurance coverage on June 1, 2020. On December 1, 2020, Verne Cova collected $30,000 for consulting services to be performed from December 1, 2020, through March 31, 2021 Veme Cova performed consulting services for a client in December 2020. The client will be billed $4,200. 7. Verne Cova pays its employees total salaries of $9.000 every Monday for the preceding 5-day week (Monday through Friday). On Monday, December 29, employees were paid for the week ending December 26. All employees worked the last days of 2020. Prepare adjusting entries for the seven items described above. (Credit account titles are automatically indented when the amount is entered. Do not indent manually)

Answer 1

Adjusting entry

No	General Journal	Debit	Credit
1	Interest expense (10000*12%*4/12)	400
	Interest payable		400
2	Supplies expense (2450-900)	1550
	Supplies		1550
3	Depreciation expense	1000
	Accumulated depreciation-equipment		1000
4	Insurance expense (2100/12*7)	1225
	Prepaid insurance		1225
5	Unearned service revenue (30000/4)	7500
	Service revenue		7500
6	Account receivable	4200
	Service revenue		4200
7	Salaries and wages expense (9000/5*3)	5400
	Salaries and wages payable		5400