Question

Laughter Landscaping has collected the following data for the December 31 adjusting​ entries:

a.

Each​ Friday,Laughter pays employees for the current​ week's work. The amount of the weekly payroll is $8,000 for a​ five-day workweek. This year December 31 falls on a Tuesday.

Laughter will pay its employees on January 3.

b. On January 1 of the current​ year,Laughter purchases an insurance policy that covers two​ years, $8,000.

c. The beginning balance of Office Supplies was $4,300. During the​ year, Laughter purchased office supplies for $5,600​, and at December 31 the office supplies on hand total $1,500.

d. During​ December, Laughter designed a landscape plan and the client prepaid $6,500. Laughter recorded this amount as Unearned Revenue. The job will take several months to​ complete, and Laughter estimates that the company has earned 40​% of the total revenue during the current year.

e. At December​ 31, Laughter had earned $3,000 for landscape services completed for Turnkey Appliances. Turnkey has stated that it will pay Laughter on January 10.

f. Depreciation for the current year includes​ Equipment, $3,000​; and​ Trucks, $2,200.

g. Laughter has incurred $250 of interest expense on a $550 interest payment due on January 15

Requirement 1. Journalize the adjusting entry needed on December 31 for each of the items affecting Laughter Landscaping. Assume Laughter records adjusting entries only at the end of the year. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

a. Each​ Friday, Laughter pays employees for the current​ week's work. The amount of the weekly payroll is $8,000 for a​ five-day workweek. This year December 31 falls on a Tuesday. Laughter will pay its employees on January 3.

Answer 1

Date	Details	Dr. $	Cr. $
a	Wages account Dr. (8000/5 x2)	3200
	Accrued wages account Cr.		3200
	(Being the wages accrued for 2 days)
b	Prepaid insurance A/c Dr. (8000/2)	4000
	Insurance A/c Cr		4000
	(Being the insurance prepaid for 1 year)
c	Supplies Expense A/c Dr.	8400
	Supplies A/c Cr. (4600+5600-1500)		8400
	(Being the office supplies used for the year)
d	Unearned revenue A/c Dr. (6500x 40/100)	2600
	Revenue A/c Cr.		2600
	(Being the Revenue earned has beed adjusted)
e	Accrued revenue A/c Dr.	3000
	Revenue A/c Cr.		3000
	(Being the Accrued revenue has been recorded)
f	Income statement (Profit & Loss A/c) Dr.	3000
	Provision for Depreciation on Equipment A/c Cr.		3000
	(Being the Equipment depreciated)
	Income statement (Profit & Loss A/c) Dr.	2200
	Provision for Depreciation on Truck A/c Cr.		2200
	(Being the Truck depreciated)
g	Interest A/c Dr. (550-250)	300
	Accrued Interest A/c Cr.		300
	(Being the amount of interest accrued)