Question

Exercise 3-4 Preparing adjusting entries LO P1, P3, P4 a. Wages of $8,000 are earned by workers but not paid as of December 31. b. Depreciation on the company's equipment for the year is $12,040. c. The Office Supplies account had a $440 debit balance at the beginning of the year. During the year, $5,464 of office supplies are purchased. A physical count of supplies at December 31 shows $596 of supplies available. d. The Prepaid Insurance account had a $5,000 balance at the beginning of the year. An analysis of insurance policies shows that $2,300 of unexpired insurance benefits remain at December 31. e. The company has earned (but not recorded) $800 of interest revenue for the year ended December 31. The interest payment will be received 10 days after the year-end on January 10. f. The company has a bank loan and has incurred (but not recorded) interest expense of $3,500 for the year ended December 31. The company will pay the interest five days after the year-end on January 5. For each of the above separate cases, prepare adjusting entries required of financial statements for the year ended (date of) December 31.

Answer 1

Required:

Transaction	General Journal	Debit	Credit
a	Wages expenses	$8,000
	Wages payable		$8,000
b	Depreciation expenses	$12,040
	Accumulated depreciation - Equipment		$12,040
c	Supplies expenses (440 + 5,464 - 596)	$5,308
	Supplies		$5,308
d	Insurance expenses (5,000 - 2,300)	$2,700
	Prepaid insurance		$2,700
e	Interest receivable	$800
	Interest revenue		$800
f	Interest expenses	$3,500
	Interest payable		$3,500