Question

1. Kidman Company prepares monthly financial statements. Below are listed some selected accounts and their balances in the September 30 trial balance before any adjustments have been made for the month of September.

KIDMAN COMPANY

Partial Trial Balance

September 30, 2020

                                                                                                                        Debit         Credit

Supplies......................................................................................      $ 3,200

Prepaid Insurance....................................................................         4,200

Equipment..................................................................................       16,200

Accumulated Depreciation—Equipment...............................                            $1,000

Salaries & Wages Payable......................................................                                   -0-

An analysis of the account balances by the company’s accountant provided the following additional information:

1.   A physical count of supplies reported $1,400 on hand on September 30.

2.   A two-year insurance policy was purchased on June 1 for $4,800.

3.   Depreciation on the equipment is $3,300 per year.

4.   Unpaid salaries & wages at September 30 total $700.

Using the above additional information, prepare the monthly adjusting entries for Kidman Company on September 30. Be sure to show ALL work!

Answer 1

Solution:

Adjusting Journal Entries
Date	Particulars	Debit	Credit
1)	Supplies expense Dr ($3200 - $1400)	$1,800
	To Supplies		$1,800
2)	Insurance Expense Dr ($4800*1/24)	$200
	To Prepaid Insurance		$200
3)	Depreciation expense Dr (3300*1/12)	$275
	To Accumulated Depreciation		$275
4)	Salaries and wages Expense Dr	$700
	To Salaries and wages Payable		$700