Question

CRANE ENGINEERING Trial Balance December 31, 2021 Debit Credit Cash $8,300 Accounts receivable 6,650 Supplies 5,050 Prepaid insurance 7,560 Notes receivable 11,500 Equipment 27,400 Accumulated depreciation equipment $8,220 Accounts payable 4,000 H. Duguay, capital 38,240 H. Duguay, drawings 53,500 Service revenue 109,000 Salaries expense 39,500 $159,460 $159,460 Additional information: 1. Services of $10,350 was provided but unrecorded and uncollected as at December 31, 2021. 2. On June 1, the company purchased a one-year insurance policy. 3. Depreciation on the equipment for 2021 is $2,740. 4. A count on December 31, 2021, showed $1,700 of supplies on hand. 5. The four-month, 4% note receivable was issued on October 1, 2021. Interest and principal are payable on the maturity date.

Answer 1

Solution of the above problem is as under:

Crane Engineering
Statement showing recording of Adjustment Entries occurred during December 31,2021
S.No.	Account Titles and Explanation	Debit ($)	Credit ($)
1	Accounts Receivable A/c Dr.	10350
	To Service Revenue A/c		10350
	(Being services provided left unrecorded, now recorded)
2	Insurance Expense A/c Dr.	4410
	To Prepaid Insurance A/c		4410
	(Being insurance expense recorded for 7 Months)
3	Depreciation Expense A/c Dr.	2740
	To Accumulated Depreciation-Equipment		2740
	(Being depreciation on equipment carged and created)
4	Supplies Expenses A/c Dr.	3350
	To Supplies A/c		3350
	(Being supplies used during the year)
5	Interest Accrued on Notes A/c Dr	115
	To Interest Receivable A/c		115
	(Being interest accrued on 4% Note receivable recorded)

Posting of Adjustment Entries
Accounts Receivable A/c
Dr.			Cr.
Particulars	Amount ($)	Particulars	Amount ($)
To Balance b/d	6650
To Service Revenue	10350	By Balance c/d	17000
	17000		17000
Service Revenue A/c
Dr.			Cr.
Particulars	Amount ($)	Particulars	Amount ($)
		By Balance b/d	109000
To Balance c/d	119350	By Accounts Receivable	10350
	119350		119350
Insurance Expense A/c
Dr.			Cr.
Particulars	Amount ($)	Particulars	Amount ($)
To Prepaid Insurance	4410	By Profit and Loss A/c	4410
	4410		4410
Prepaid Insurance A/c
Dr.			Cr.
Particulars	Amount ($)	Particulars	Amount ($)
To Balance b/d	7560	By Prepaid Expenses	4410
		By Balance c/d	3150
	7560		7560
Depreciation Expense A/c
Dr.			Cr.
Particulars	Amount ($)	Particulars	Amount ($)
To Accumulated Depreciation-Equipment	2740	By Profit and Loss A/c	2740
	2740		2740
Accumulated Depreciation-Equipment
Dr.			Cr.
Particulars	Amount ($)	Particulars	Amount ($)
		By Balance b/d	8220
To Balance c/d	10960	By Depreciation Expense	2740
	10960		10960
Supplies Expenses A/c
Dr.			Cr.
Particulars	Amount ($)	Particulars	Amount ($)
To Supplies	3350	By Profit and Loss	3350
	3350		3350
Supplies A/c
Dr.			Cr.
Particulars	Amount ($)	Particulars	Amount ($)
To Balance b/d	5050	By Supplies Expenses	3350
		By Balance c/d	1700
	5050		5050
Interest Accrued on Notes A/c
Dr.			Cr.
Particulars	Amount ($)	Particulars	Amount ($)
To Interest Receivable	115	By Balance c/d	115
	115		115
Interest Receivable A/c
Dr.			Cr.
Particulars	Amount ($)	Particulars	Amount ($)
To Balance c/d	115	By Interest Accrued on Notes	115
	115		115

Closing Entry
S.No	Account Title and Explanation	Debit ($)	Credit ($)
1	Profit and Loss A/c Dr	10500
	To Insurance Expense A/c		4410
	To Depreciation Expense A/c		2740
	To Supplies Expense A/c		3350
	(Being expenses charged in P&L Account)