Question

LO3 P3-59A. (Learning Objective 3: Adjust the accounts) Journalize the adjusting entry needed on December 31, the end of the current accounting period, for each of the following indepen dent cases affecting Castaway Corporation. Include an explanation for each entry a. The details of Prepaid Insurance are as follows Prepaid Insurance Jan B2,900 4,000 b. Castaway pays employees each Friday. The amount of the weekly payroll is $6,100 for c. Castaway has a note receivable. During the current year, Castaway has earned accrued d. The beginning balance of supplies was $3,000. During the year, Castaway purchased e. Castaway is providing services for Blue Whale Investments, and the owner of Blue Castaway prepays insurance on March 31 each year. At December 31, $1,700 is still prepaid. a five-day work week. The current accounting period ends on a Wednesday interest revenue of $700 that it will collect next year supplies costing $6,200, and at December 31 supplies on hand total $2,200 Whale paid Castaway an annual service fee of $10,500. Castaway recorded this amount as Unearned Service Revenue. Castaway estimates that it has earned 60% of the total fee during the current year f. Depreciation for the current year includes Office Furniture, $3,800, and Equipment, $5,400

Answer 1

Adjusting entries

Date	account and explanation	debit	credit
Dec 31	Insurance expense (6900-1700)	5200
	Prepaid insurance		5200
	(To record insurance expense)
Dec 31	Wages expense (6100/5*3)	3660
	Wages payable		3660
	(To record accrued wages)
Dec 31	Interest receivable	700
	Interest revenue		700
	(To record interest)
Dec 31	Supplies expense (3000+6200-2200)	7000
	Supplies		7000
	(To record supplies)
Dec 31	Unearned service revenue (10500*60%)	6300
	Service revenue		6300
	(To record service revenue)
Dec 31	Depreciation expense (3800+5400)	9200
	Accumulated depreciation-Office furniture		3800
	Accumulated depreciation-equipment		5400
	(To record Dep)