Question

Exercise 3-5 Verne Cova Company has the following balances in selected accounts on December 31, 2017 Accounts Receivable Accumulated Depreciation-Equipment Equipment Interest Payable Notes Payable Prepaid Insurance Salaries and Wages Payable Supplies Unearned Service Revenue $ 0 7,000 0 10,100 3,300 2,000 29,600 All the accounts have normal balances. The information below has been gathered at December 31, 2017 1. 2. 3. 4. 5. Verne Cova Company borrowed $10,100 by signing a 1296, one-year note on September 1, 2017. A count of supplies on December 31, 2017, indicates that supplies of $900 are on hand Depreciation on the equipment for 2017 is $1,500 Verne Cova Company paid $3,300 for 12 months of insurance coverage on June 1, 2017 On December 1, 2017, Verne Cova collected $29,600 for consulting services to be performed from December 1, 2017, through March 31, 2018. The company had performed 1/4 of the services by December 31 Verne Cova performed consulting services for a client in December 2017. The client will be billed $4,500 Verne Cova Company pays its employees total salaries of $8,500 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 2017 6. 7.

Answer 1

No	Account title and explanation	Debit	Credit
1	Interest expense	404		10100*0.12*(4/12)
	Interest Payable		404
	(To record Interest Payable)
2	Supplies expenses	1100
	Supplies		1100
	(To record supplies consumed)
3	Depreciation expense	1500
	Accumulated Depreciation - Equipment		1500
	(To record depreciation expense)
4	Insurance expense	1925		3300*(7/12)
	Prepaid Insurance		1925
	(To record Insurance expense)
5	Unearned Service Revenue	7400		29600*(1/4)
	Service Revenue		7400
	(To record revenue earned)
6	Accounts Receivable	4500
	Service Revenue		4500
	(To record revenue)
7	Salaries Expense	5100		8500*(3/5)
	Salary Payable		5100
	(To record accrued salary accrued)