Question

1) Silver Star Realty Co. pays weekly salaries of $16,200 on Friday for a five-day workweek ending on that day.

Journalize the necessary adjusting entry assuming that the accounting period ends on Tuesday. If an amount box does not require an entry, leave it blank.

2) The supplies account had a beginning balance of $4,085 and was debited for $7,810 for supplies purchased during the year.

Journalize the adjusting entry required at the end of the year, assuming the amount of supplies on hand is $3,610. If an amount box does not require an entry, leave it blank.

3) The estimated amount of depreciation on a building for the current year is $8,120.

Journalize the adjusting entry to record the depreciation. If an amount box does not require an entry, leave it blank.

Answer 1

1. To record: the adjustment entry for the accrued salary for the period ending on tuesday.

Salaries expenses A/c Dr. $6480

To Salaries Payable. $6480

Calculation:

Salaries payable on Tuesday =(weekly salaries /no. of working days in a week) * no. of days upto tuesday

=($16200/5)*2=$6480

Accrued Expenses Accrued expense refers to the expenses those are unpaid, but the goods and services related to the payment are received in a particular accounting period. These accrued expenses are payable for the business. Business treats accrued expenses as a liability Adjusting Entries Adjusting entries indicates those entries, which are passed in the books of accounts at the end of one accounting period. These entries are passed in the books of accounts as per the revenue recognition principle and the expenses recognition principle to adjust the revenue, and the expenses of a business in the period of their occurrence. Rule of Debit and Credit: Debit - Increase in all assets, expenses & dividends, and decrease in all liabilities and stockholders' equity. Credit - Increase in all liabilities and stockholders' equity, and decrease in all assets & expenses.

2. To prepare adjustments entry at the end of the year

In this case the business recognised the supplies expense at the end of the year. So the necessary adjusting entry that the business should record to recognize the prepaid expense is as follows :

Supplies expenses A/c Dr. $8285

To Supplies A/c. $8285

Calculation:

Supplies expense = Supplies A/c balance at the beginning + Supplies purchased during the year- Supplies A/c balance at the end

=$4085+$7810-$3610

=$8285

Adjusting entries: Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. All adjusting entries affect at least one income statement account (revenue or expense), and one balance sheet account (asset or liability).

3. To record an adjustment entry for depreciation expense

In this case the business recognised the depreciation expense at the end of the year . So, the necessary adjusting entry is as follows :

Depreciation expense A/c Dr. $8120

To Accumulated depreciation - equipment $8120