Question

Wedona Energy Consultants prepares adjusting entries monthly. Based on an analysis of the unadjusted trial balance at January 31 2020, the following information was available for the preparation of the January 31, 2020, month-end adjusting entries: a. Equipment purchased on November 1 of this accounting period for $23.760 is estimated to have a useful life of 3 years. After 3 years of use, it is expected that the equipment will be scrapped due to technological obsolescence b. Of the $12.000 balance in Unearned Consulting Revenue, $9,300 had been earned. C. The Prepaid Rent account showed a balance of $15,300. This was paid on January 1 of this accounting period and represents SX months of rent commencing on the same date. d. Accrued wages at January 31 totalled $19,100. e. One month of interest had accrued at the rate of 3% per year on a $54,000 note payable. f. Unrecorded and uncollected consulting revenues at month-end were $6.450. g. A $4,050 insurance policy was purchased on April 1 of the current accounting period and debited to the Prepaid Insurance account Coverage began April 1 for 18 months. h. The monthly depreciation on the office furniture was $655 I. Repair revenues accrued at month-end totalled $4.000. J. The Store Supplies account had a balance of $860 at the beginning of January. During January $1840 of supplies were purchased and debited to the Store Supplies account. At month-end, a count of the supplies revealed a balance of $710. Assume Wedona Energy uses the straight-line method to depreciate its assets. Required: Prepare adjusting journal entries for the month ended January 31, 2020, based on the above.

Answer 1

Adjusting entry

No	General journal	Debit	Credit
a	Depreciation expense (23760/3)/12	660
	Accumulated depreciation-equipment		660
b	Unearned consulting revenue	9300
	Consulting revenue		9300
c	Rent expense (15300/6)	2550
	Prepaid rent		2550
d	Wages expense	19100
	Wages payable		19100
e	Interest expense (54000*3%*1/12)	135
	Interest payable		135
f	Account receivable	6450
	Consulting revenue		6450
g	Insurance expense (4050/18)	225
	Prepaid insurance		225
h	Depreciation expense	655
	Accumulated depreciation-Office furniture		655
i	Account receivable	4000
	Repair revenue		4000
j	Supplies expense (860+1840-710)	1990
	Supplies		1990