Question

O 34% LO 4-1, 4-2 Fes Company is making ad qug information fo Determining Adjustments and Accounting Equation Effects any is making adjusting journal entries for the year ended December 31, 2015. In devel- formation for the adjusting journal entries, you learned the following: so-year insurance premium of 57 200 was paid on January 1, 2015, for coverage begin- og on that date. As of December 31, 2015, he usedjusted balances were 57.200 for Prepaid Insurance and SO for Insurance Expense, Al December 31, 2015. you obtained the following slating to supplies. 6:38 PM Unadjusted balance in Supplies on December 31, 2015 Unadjusted balance in Supplies Expense on December 31, 2015 Supplies on hand, counted on December 31, 2015 $15,000 72,000 10,000 Required: 1. Or the $7,200 paid for insurance, what amount should be reported on the 2015 income state- ment as Insurance Expense? What amount should be reported on the December 31, 2015, balance sheet as Prepaid Insurance? What amount should be reported on the 2015 income statement as Supplies Expense? What amount should be reported on the December 31, 2015, balance sheet as Supplies? Using the format shown in the demonstration case, indicate the accounting equation effects of the adjustment required for (a) insurance and (b) supplies. . AT&T

Answer 1

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Fes Company
Answer 1
Insurance Expense	Amount $
Cash paid	7,200.00
Period (Years)	2.00
Year from Jan 1 to December 31	1.00
Insurance Expense to be recognized in 2015	3,600.00
Prepaid Insurance to be shown on 31st December 2015	3,600.00
Accounting equation effect:
Prepaid Insurance (Asset) will decrease by $ 3,600 and Insurance expense will increase by $ 3,600 so equity will reduce by $ 3,600.
Answer 2
Supplies Expense	Amount $
Unadjusted Balance on 31 Dec 2015	15,000.00
Supplies on hand counted on 31 Dec 2015	10,000.00
Supplies to be expense	5,000.00
Unadjusted supplies expense on 31 Dec 2015	72,000.00
Total supplies expense	77,000.00
Supplies expense to be recognized in 2015	77,000.00
Supplies amount to be reported in Balance Sheet.	10,000.00
Accounting equation effect:
Supplies (Asset) will decrease by $ 5,000 and Supplies expense will increase by $ 5,000 so equity will reduce by $ 5,000.