Question

The following general ledger accounts and additional information are taken from the records of Wolfe Corporation at the end of its fiscal year, December 31, 2016. (28 marks, 7 marks each) Additional information: a. The prepaid insurance is for a one-year policy, effective July 1, 2016. b. A physical count indicated that $500 of supplies is still on hand. c. $50 of December rent expense has not been recorded.

Cash 101 Unused Supplies 173 Advertizing Exp. 610

Bal. 2,700   Bal 700                     Bal. 200

Accounts Receivable110 Share Capital 320 Salaries Expense 656

Bal. 2,000                           Bal 3,800             Bal. 4,500               

Prepaid Insurance 161    Repair Revenue 450      Rent Expense 654

Bal. 1,200                         Bal 7,750                       Bal. 250

Required : 1. Record all necessary adjusting entries in general journal format including general ledger account numbers. Assume the following account numbers: Insurance Expense: 631; Supplies Expense: 668. 2. Post the adjusting entries to T-accounts and calculate balances. 3. Prepare all closing entries in general journal format. Include general ledger account numbers. 4. Post the closing entries to the applicable general ledger accounts.

Answer 1

	Wolfe Corporation
	Adjustment Journal entries;
Date	Account's tittle	Debit $	Credit $
2016
31-Dec	Insurance Expense ( $ 1,200 x 6/12 )	600
	Prepaid Insurance		600
	( To be record expiry of insurance premium for the period July 1 till December 31 )
31-Dec	Supplies Expenses ( $ 7,00 - $ 5,00 )	200
	Unused Supplies		200
	( To be record supplies consumed during the period )
31-Dec	Rent Expenses	50
	Rent Payable		50
	( To be record rent expenses for the month of December due but not paid )

Prepaid Insurance
Account's tittle	Debit $	Account's tittle	Credit $
Unadjusted Balance , December 31 2016	1200
		Insurance Expenses	600
		Adjusted Balance	600
TOTAL	1200	TOTAL	1200
Unused Supplies
Account's tittle	Debit $	Account's tittle	Credit $
Unadjusted Balance , December 31 2016	700
		Supplies Expenses	200
		Adjusted Balance	500
TOTAL	700	TOTAL	700
Rent Expenses
Account's tittle	Debit $	Account's tittle	Credit $
Unadjusted Balance , December 31 2016	250
Rent Payable ( December )	50
		Adjusted Balance	300
TOTAL	300	TOTAL	300
Rent Payable
Account's tittle	Debit $	Account's tittle	Credit $
		Rent Expenses	50
Adjusted Balance	50
TOTAL	50	TOTAL	50