clarkluberisco Posts: 6, Reputation: 1 New Member #1 Sep 17, 2013, 07:48 AM
Preparing Adjusting Entries, Missing information
My sister sent me her homework, she told me she doesn't know how to answer them so she asked for my help, unluckily, I can't answer them because what I've been studying is far from this. Please help me answer this problems. Explanation is a great help. :)

problem#1

Prepare the adjusting entry for each if the following situations. The last day of the accounting period is Dec 31.

a) the payment of the 19,000 insurance premium for two years in advance was originally recorded as Prepaid insurance. One year of the policy has now expired.
b) all employees earn a total of 10,000 per day for a five-day week beginning on Monday and ending Friday. They were paid for the workweek ending Dec 26. They worked on Monday, Dec 29, Tuesday, Dec 30 and Wednesday, Dec 31.
c) the suppliers account had a balance of 4,480 on Jan 1. During the year, 11,000 of supplies were bought. A year-end inventory showed that 6,400 worth if supplies are still on hand.
d) equipment costing 588,000 has a useful life of five years with an 80,000 salvage value at the end of five years. Record the depreciation for the year.

Problem# 2

A series of adjusting entries have been shown in a journal form. However, only one-half of each adjusting entry is shown. Complete the journal entry.

June 30
Interest income 7,000(credit)
Depreciation Expense-computer Equipment 124,000(debit)

Prepaid rent 4,000(credit)

Unearned tutorial revenues 46,500(debit)

interest expense 26,000(debit)

salaries payable 140,000(credit)

unearned programming revenues 24,000(debit)

rent receivable 25,000(debit)

accounting fees receivable 9,500(debit)

unearned subscription revenues 64,000(debit)

insurance expense 11,000(debit)

utilities expense 8,000(debit)

office supplies 28,000(credit)
 beplmi Posts: 62, Reputation: 3 Junior Member #2 Sep 18, 2013, 07:53 AM
Start by making a T account or a journal entry. If she is this far in the class she should know how to make a journal entry. Then once you do that you + - all the debits and credits from the original amounts.
 pready Posts: 3,197, Reputation: 207 Ultra Member #3 Sep 18, 2013, 10:47 AM
Problem 1,
a. For this you have to determine how much insurance was used in the period. Based on the information half of the insurance has expired, so take your amount paid and divide it by 2 to get the amount used or expired in the period. Now you need to know what accounts to debit and credit. Your Debit will be to Insurance Expense and your Credit will be to Prepaid Insurance for the amount calculated.

b. For this one you have to calculate the amount of pay for three days out of a possible five days worked in the period, so take the total amount of pay for five days times 3/5 to get the amount of pay for three days. Your Debit will be to Salaries Expense and your Credit will be to Salaries Payable for the amount of pay calculated.

c. For this one you have to calculate the amount of supplies used, so take your beginning account balance plus your purchases equals the amount of supplies available minus your actual balance equals the amount of supplies used. Your Debit will be to Supplies Expense and your Credit will be to Supplies for the amount of supplies used.

d. For this one you first have to calculate the amount of depreciation used in the year. This is the straight line method, so take your cost of equipment minus the salvage value to get your depreciable base. Now take your depreciable base and divide it by the number of years to get your depreciation per year. Your Debit will be to Depreciation Expense and your Credit will be to Accumulated Depreciation - Equipment for the amount of depreciation per year.

For problem 2 you are given half of an adjusting entry and you have to determine what the other half of the entry will be. Your accounts will be:
Interest Receivable
Accumulated Depreciation - Computer Equipment
Rent Expense
Tutorial Revenues Earned
Interest Payable
Salaries Expense
Programming Revenues Earned
Rent Revenues
Accounting Fees Earned
Subscription Revenues
Prepaid Insurance
Utilities Payable
Office Supplies Expense

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