Question

Record the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet category or on the income statement by entering the account name and amount and indicating whether it is an addition (+) or subtraction (–). Column headings reflect the expanded balance sheet equation; items that affect net income should not be shown as affecting stockholders' equity. The first transaction is provided as an illustration.

1. During the month, the Supplies (asset) account was debited $1,800 for supplies purchased. The cost of supplies used during the month was $1,250. Record the adjustment to properly reflect the amount of supplies used and supplies still on hand at the end of the month.
2. An insurance premium of $400 was paid for the coming year. Prepaid Insurance was debited.
3. Wages of $3,425 were paid for the current month.
4. Interest revenue of $250 was received for the current month.
5. Accrued $620 of commissions payable to sales staff for the current month.
6. Accrued $110 of interest expense at the end of the month.
7. Received $2,325 on accounts receivable accrued at the end of the prior month.
8. Purchased $640 of merchandise inventory from a supplier on account.
9. Paid $160 of interest expense for the month.
10. Accrued $820 of wages at the end of the current month.
11. Paid $530 of accounts payable.

Required:

1. Indicate the financial statement effect.
2. Prepare the journal entry for the above transactions.

quired A Required B icate the financial statement effect. Balance Sheet Category Income Sta Liabilities Stockholders' Equity Net Income a. Supplies Exp -1,250 saction/ ustment Assets Supplies -1,250 b. Prepaid insurance +400 Cash -400 Cash -3,425 Cash +250 Wages expense -3,425 Interest revenue +250 Commissions payable +620 Commissions expense Interest payable +110 Interest expense - 110 g. Cash +2,325 h. Accounts payable +640 Merchandise inventory +640 Cash-160 i. Interest expense - 160 Wages expense -820 Wages payable +820 Accounts payable -530 k. Cash -530

Answer 1

2325 Видин rent General Tournel Webit o work in Pisas Inventory At 158 raw material All CRaw materialused 1250 640 11250 Event General Debt undit Journal 12325 Cash All - er 70 Accounts Receivable All Amount feuivable received 2) Merchandire Inventory AC 640 lo Accounts paydole churchese Merchandise Inventory on account from supplier of Interest expense AIC an To Cash Alc Clayment of Intep festhement m) Wages expenses All 7820 820 To wages payable Ale (Accurid wages at the end of the current month) 460 3 Finished Goods Inventory AL 1250 To work in proces Inventor Cloconde guds completed' closing stock ALL 350 To trading AC 550 closing stock brought in the books of accounts Prepaid Insurance All Tu Cash ALL Chrepaid insurance faid in advanced that hasnoty et expired) e) Insurance Expense ALC 700 To prepaid Insurance 400 (adjusting entry as the prepard Insurance expires) - I wages Alc 3425 TO Cash Aaount L 3425 (Wogesferd foscustent month g) Interest Cash AIC 250 To Interest Revenue 250 Interest Revenue Received) n 530 153c Account Payable All To cesh Account Payable prich V 620 620 Commission expense AIC To commissim Payable Cacciated Commission payable to staff) 1 710 Accured Interest Income To Interest Income Coccheud Int of current morth)