Question

Alpha's Graphics was organized on January 1, 2020, by Gabriel Alpha. At the end of the first 6 months of operations, the trial balance contained the following accounts. € 18,000 8.700 22,000 62,500 Debits Cash Accounts Receivable Equipment Insurance Expense Salaries and Wages Expense Supplies Expense Advertising Expense Rent Expense Utilities Expense Credits €9,000 Notes Payable 14,300 Accounts Payable 47,000 Share Capital-Ordinary 2,400 Service Revenue 29,700 3,500 2,000 1,600 1,700 €111,200 €111.200 Analysis reveals the following additional data 1. The €3,500 balance in Supplies Expense represents supplies purchased in January. At June 30, €1,800 of supplies are on hand. 2. The note payable was issued on February 1. It is a 9%, 6-month note. 3. The balance in Insurance Expense is the premium on a one-year policy, dated April 1, 2020. 4. Service revenues are credited to revenue when received. At June 30, services revenue of €1,200 are unearned. 5. Revenue for services performed but unrecorded at June 30 totals €2,200. 6. Depreciation is €2,000 per year. (a) Your answer is correct. Journalize the adjusting entries at June 30. (Assume adjustments are recorded every 6 months.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Debit Credit 1800 No. Date Account Titles and Explanation 1. June 30 Supplies Supplies Expense 2. June 30 Interest Expense 1800 1800 1800 Interest Payable 3. June 30 Prepaid Insurance Insurance Expense 4. June 30 Service Revenue Unearned Service Revenue 5. June 30 Accounts Receivable 1200 2200 Service Revenue 2200 6. June 30 Depreciation Expense Accumulated Depreciation-Equipment 1000

Answer 1

	Debit	Credit	Calculations	Logics
Supplies	1800
Supplies expense	1700		(3500-1800)	Supplies expense already debited was 3500, after passing adjusting entry 1800 was credited, hence remaining balance will be 1700 debit.( refer adjusting entry No. 1)
Interest expense	675
Interest payable		675
Prepaid insurance	1800
Insurance expense	600		(2400-1800)	(Insurance Expense debit balance was 2400, in adjusting entry We have CREDITED the insurance expense by 1800 hence net balance 600 DEBIT. (refer adjusting entry No. 3)
Service revenue		63500	(62500-1200+2200)	(Service revenue CREDIT balance was 65500, in Adjusting entry No. 4 we DEBITED it by 1200 and in Adjusting entry No. 5 We have CREDITED it by 2200 hence we go balance of 63500.
Unearned service revenue		1200
Account receivable	16500			(Account receivable beginning balance was DEBIT 14300 and in adjusting entry no. 5 we have DEBITED it by 2200 more, hence new balance 16500.
Cash	9000
Depreciation expense	1000
Accumulated depreciation-equipment		1000
Notes payable		18000
Accounts payable		8700
Share capital - Ordinary		22000
Advertising Expense	2000
Equipment	47000			(Equipment beginning balance was DEBIT 47,000 in which no adjustment was made.)
Salaries and wages expense	29700
Rent expense	1600
Utilities Expense	1700
€	115075	115075

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