a. Two-thirds ofthe work related to $12,000 cash received in advance is performedthis period. b. Wages of $8,000are earned by workers but not paid as of December 31, 2011. c. Depreciation onthe companyâs equipment for 2011 is $10,720. d. The Office Supplies account had a $310 debit balance on December31, 2010. During 2011, $6,368 of office supplies are purchased. Aphysical count of supplies at December 31, 2011, shows $687 ofsupplies available.
e. The Prepaid Insurance account had a $5,000 balance on December31, 2010. An analysis of insurance policies shows that $1,900 ofunexpired insurance benefits remain at December 31, 2011.
f. The company hasearned (but not recorded) $750 of interest from investments in CDsfor the year ended December 31, 2011. The interest revenue will bereceived on January 10, 2012. g. The company has a bank loan and has incurred (but not recorded)interest expense of $3,000 for the year ended December 31, 2011.The company must pay the interest on January 2, 2012.
For each of the above separate events, prepare the requiredadjusting entries for the year ended December 31, 2011 (Assume thatprepaid expenses are initially recorded in asset accounts and thatfees collected in advance of work are initially recorded asliabilities.)
| a. | Two-thirds ofthe work related to $12,000 cash received in advance is performedthis period. |
| b. | Wages of $8,000are earned by workers but not paid as of December 31, 2011. |
| c. | Depreciation onthe companyâs equipment for 2011 is $10,720. |
| d. | The Office Supplies account had a $310 debit balance on December31, 2010. During 2011, $6,368 of office supplies are purchased. Aphysical count of supplies at December 31, 2011, shows $687 ofsupplies available. |
| e. | The Prepaid Insurance account had a $5,000 balance on December31, 2010. An analysis of insurance policies shows that $1,900 ofunexpired insurance benefits remain at December 31, 2011. |
| f. | The company hasearned (but not recorded) $750 of interest from investments in CDsfor the year ended December 31, 2011. The interest revenue will bereceived on January 10, 2012. |
| g. | The company has a bank loan and has incurred (but not recorded)interest expense of $3,000 for the year ended December 31, 2011.The company must pay the interest on January 2, 2012. |
For each of the above separate events, prepare the requiredadjusting entries for the year ended December 31, 2011 (Assume thatprepaid expenses are initially recorded in asset accounts and thatfees collected in advance of work are initially recorded asliabilities.)
Related questions
| a. | Depreciation onthe company's equipment for 2011 is computed to be $12,000. |
| b. | The Prepaid Insurance account had a $5,000 debit balance atDecember 31, 2011, before adjusting for the costs of any expiredcoverage. An analysis of the companyâs insurance policies showedthat $1,970 of unexpired insurance coverage remains. |
| c. | The Office Supplies account had a $520 debit balance on December31, 2010; and $2,680 of office supplies were purchased during theyear. The December 31, 2011, physical count showed $614 of suppliesavailable. |
| d. | One-third of thework related to $15,000 of cash received in advance was performedthis period. |
| e. | The Prepaid Insurance account had a $5,700 debit balance atDecember 31, 2011, before adjusting for the costs of any expiredcoverage. An analysis of insurance policies showed that $3,730 ofcoverage had expired. |
| f. | Wage expenses of$2,000 have been incurred but are not paid as of December 31,2011. |
Prepare adjusting journal entries for the year ended (date of)December 31, 2011, for each of the above separate situations.Assume that prepaid expenses are initially recorded in assetaccounts. Also assume that fees collected in advance of work areinitially recorded as liabilities.
Rainmaker Environmental Consultants is just finishing its secondyear of operations. The companyâs unadjusted trial balance atOctober 31, 2011 follows:
Rainmaker Environmental Consultants | ||
Unadjusted Trial Balance | ||
October 31, 2011 | ||
Account | Debit | Credit |
Cash | 28,000 | |
Accounts receivable | 56,000 | |
Interest receivable | 0 | |
Notes receivable | 30,000 | |
Supplies | 4,600 | |
Prepaid insurance | 9,350 | |
Prepaid rent | 21,000 | |
Office furniture | 61,440 | |
Accumulated depreciation, office furniture | 20,480 | |
Accounts payable | 35,000 | |
Wages payable | 0 | |
Unearned consulting fees | 13,160 | |
Jeff Moore, capital | 60,000 | |
Jeff Moore, withdrawals | 16,450 | |
Consulting fees earned | 314,600 | |
Interest revenue | 1,400 | |
Depreciation expense â office furniture | 0 | |
Wages expense | 147,000 | |
Insurance expense | 0 | |
Rent expense | 64,000 | |
Supplies expense | 6,800 | |
Totals | 444,640 | 444,640 |
Rainmaker prepares adjustments each October 31. The followingadditional information is available on October 31, 2011:
a.It was determined that $12,000 ofthe unearned Consulting fees had not yet been earned.
b.It was discovered that $6,000 ofthe balance in consulting fees earned was for services to beperformed in November.
c.The balance in the prepaid rentaccount represented three months of rent beginning September 1,2011.
d.Accrued wages at October 31totaled $6,800.
e.The office furniture waspurchased on March 1, 2010, and has an estimated useful life of twoyears. After two years, it is expected that the furniture will beworthless.
f.Accrued consulting fees atyear-end totaled $4,200.
g.Interest of $200 had accrued onthe note receivable for the month of October.
h.The balance in the prepaidinsurance account represents the remaining balance of a two-yearpolicy purchased on April 1, 2010.
i.A count of the supplies onOctober 31 revealed a balance remaining of $900.
Required
Prepare adjusting journal entries on October 31, 2011 based onthe above.
