Question

Information to prepare adjusting journal entries The following information relates to Gatsby, Inc. as of December 31 of the current year. The company uses the calendar year as its annual reporting period and the Accrual Method of Accounting. Prepaid and unearned items are recorded as assets and liabilities, respectively. Prepare all necessary adjusting journal entries and post to the T-accounts. A. The company's weekly payroll is $3,000 and is paid each Friday for a five-day work week. Assume December 31st falls on a Tuesday, but the employees will not be paid their wages until Friday, January 3rd. B. Eighteen months earlier, on July 1st the company purchased equipment that cost $160,000. Its useful life is predicted to ten years, at which time the equipment is expected to have a zero salvage/residual value. Gatsby, Inc. uses the straight-line depreciation method. Deprecation has NOT been recorded for this year. On September 1st of the current year Gatsby, Inc. was paid $45.000 in advance of future installation of alarm systems in s new homes. The amount was credited to the Unearned Revenue - Alarms account. Between September 1st and December 31st alarm systems were installed in 2 homes, completing those jobs. On October 1st of the current year the company purchased a 12-month insurance policy for $24,000. The transaction was recorded with a debit to the Prepaid Insurance account. Insurance expense has not been recorded for October, November or December. E. On December 30 of the current year the company completed an $29,000 job that has not been billed/invoiced and therefore has not been recorded. A $150,000 long-term note payable was signed on July 1st of the current year. It is a five-year note with a 5% interest rate. Interest expense as not been accrued for this year. G. Supplies at the beginning of the current year had a balance of $ 300. Supplies valued at $4,200 were purchased thoughout the year. The current balance in the account is $200. H. Depreciation on the building is calculated using the straight-line depreciation method. Gatsby estimates depreciation on the building over a 20 year period and a zero salvage/residual value.

Answer 1

Answer for the Part-1 in the given Question in the following two images:

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0 New Microsoft Excel Worksheet - Microsoft Excel (Product Activation Failed . Home - 7 X File Insert Page Layout Formulas Dald Review View - 11 -A A = Calibri BIO = = E A E Wrap lext EEEE - Merge & Center Alignment E - Copy Paste Format Painter Clipboard B65 A B General - % , Number - 83 . Conditional Format Cell Formatting as Table Styles Styles Insert Delete Format - AutoSumA ZI clear Sort Find Filter Select Editing Font - Account D C E F G H I J K L M N O P Q R S D. Prepaid Insurance Account as on 31st December XX Account Debit($) Account Credit($) To Balanc 24,000 Insurance Account as on 31st December XX Account Debit($) Account Credit($) To Balanc 15,000 G Supplies Account as on 31st December XX Account Debit($) Account Credit($) To Balanc 4,500 Supplies Expense Account as on 31st December XX Account Debit($) Account Credit($) To Balance 0 Revenue Account as on 31st December XX Account Debit($) Account Credit($) By Balance 3,81,000 H. Building Account as on 31st December XX Account Debit($) Account Credit($) To Balance 2,00,000 Accumulated Depreciation on Building Account as on 31st December XX Account Debit($) Account Credit($) By Balance 40,000 F. Long Term note Payable Account as on 31st December XX Account Debit($) Account Credit($) By Balance 1,50,000 Interest Payable Account as on 31st December XX Account Debit($) Account Credit($) By Balance 0 Interest Expense Account as on 31st December XX Account Debit($) Account Credit($) To Balanco 82 83 84 Sheet1 Sheet2 Sheet3 Sheet4, 95 Ready + EC100% 4 ENG 11 0 17:24 04-11-2019 Type here to search A 3

PART-2:
Recording the adjusting entries of Gatsby Inc., as on Dec 31,XX :
Adjustment	Account	Debit($)	Credit($)
A.	Wages Account ($3,000*(2/5))	1,200
	Wages Payable Account		1,200
	(Being Wage expense till Dec-31 got accrued)
B.	Depreciation on equipment Account	16,000
	Accumulated Depreciation on equipment Account		16,000
	(Being Depreciation for the current year recorded)
C.	Unearned Revenue Account	30,000
	Revenue Account((45,000/3)*2)		30,000
	(Being revenue recognised as the job completed for 2 alarm systems)
D.	Insurance expense Account((12,000/12)*3)	3,000
	Prepaid Insurance Account		3,000
	(Being Insurance expense of the October, November, December recorded)
E.	Accounts Receivable Account	29,000
	Revenue Account		29,000
	(Being Unrecorded Revenue recorded on completion of job)
F.	Interest Expense Account ((150,000*5%)*6/12)	3,750
	Interest Payable Account		3,750
	(Being Interest expense on Long term Note Payable caluclated and recorded for the current year)
G.	Supplies expense Account	4,300
	Supplies Account		4,300
	(Being Supplies Expense recorded)
H.	Depreciation on Builidings Account	10,000
	Accumulated Depreciation on Builidings Account		10,000
	(Being Depreciation for the current year recorded)