Question

Sunland Company has the following balances in selected accounts on December 31, 2019. 0 8,000 Accounts Receivable Accumulated Depreciation-Equipment Equipment Interest Payable Notes Payable Prepaid Insurance Salaries and Wages Payable Supplies Unearned Service Revenue 9,900 2,820 0 2,100 32,000 All the accounts have normal balances. The information below has been gathered at December 31, 2019. 1. Sunland Company borrowed $9,900 by signing a 12%, one-year note on September 1, 2019. 2. A count of supplies on December 31, 2019, indicates that supplies of $900 are on hand. 3. Depreciation on the equipment for 2019 is $2,100. 4. Sunland Company paid $2,820 for 12 months of insurance coverage on June 1, 2019. 5. On December 1, 2019, Sunland Company collected $32,000 for consulting services to be performed from December 1, 2019, through March 31, 2020. 6. Sunland Company performed consulting services for a client in December 2019. The client will be billed $3,800. 7. Sunland Company pays its employees total salaries of $9,500 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 3 days of 2019. 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 entries

No	Account and explanation	Debit	Credit
1	Interest expense	396
	Interest payable (9900*12%*4/12)		396
2	Supplies expense (2100-900)	1200
	Supplies		1200
3	Depreciation expense	2100
	Accumulated depreciation-equipment		2100
4	Insurance expense (2820*7/12)	1645
	Prepaid insurance		1645
5	Unearned service revenue (32000/4)	8000
	Service revenue		8000
6	Account receivable	3800
	Service revenue		3800
7	Salaries and wages expense (9500/5*3)	5700
	Salaries and wages payable		5700