Question

3 Below is the unadjusted trial balance for Osbourne's Animal Sanctuary which has been in operation since January 1, 2019. Prepare the journal entries for the additional information given below at December 31, 2019. Use the designated space in the Solution Packet. (20 points) 20,000 15,000 7,000 4,500 80,000 Osbourne's Animal Sanctuary Unadjusted Trial Balance December 31, 2019 Cash Accounts Receivable Prepaid Insurance Supplies Equipment A/D Equipment Accounts Payable Salaries Payable Unearned Consulting Revenue Osbourne's, Capital Consulting Revenue Depreciation Expense - Equipment Supplies Expense Salaries Expense Insurance Expense Totals 10,000 7,500 20,000 100,000 11,000 137,500 137,500 Additional Information: a. The Company has determined that $2,000 of unexpired Prepaid Insurance remains at December 31, 2019. b. The Company purchased $80,000 in equipment on January 1, 2019. The equipment is expected to have a 10 year life with no residual value. c. An inventory count at December 31, 2019 showed that only $3,000 of supplies remain. d. As of December 31, 2019, the Company earned $10,000 in consulting revenues; which it will bill in January 2020 e. The Company earned $5,000 of its Unearned Consulting Revenue as of December 31, 2019. f. Salaries earned for the last week of December 2019, but not yet paid, is $500.

Answer 1

a.

Prepaid Insurance showing balance of 7000/- In year ending company determines unexpired insurance of 2000/-. Ie $5000 has expired. For that debit Insurance premium as expense and credit Prepaid insurance ( decrease in asset)

b.

For equipment expecting 10 year life with no residual value. So the percentage of depreciation will be 100/10= 10%. And for one year 80000x10/100= 8000

c.

Supplies at the end of the year shows a balance of $3000. Company have supplies baalance for $4500. so the difference is taken as supplies expense

d.

Company earned revenue but not yet billed. Accounts receivable ( asset) will increase also consulting revenue will increase.

e.

Company received cash for consulting revenue for future. That is entered as unearned consulting revenue. When consulting service is takes place unearned revenue will turned into consulting revenue. Unearned Revenue ( liability ) will decrease and consulting revenue will increase

f.

Salary earned but not paid. Salary expense incurred during the period is expense to the company same way salary incurred not paid so it will be liablity to the company

Adjustment Entries
	Account Title	Debit	Credit
a	Insurance Expense Dr	$5000
	Prepaid Insurance		$5000
b	Depreciation Expense - Equipment   Dr	$8000
	Accumulated Depreciation ( A/D Equipment)		$8000
c	Supplies Expense        Dr	$1500
	Supplies		$1500
d	Accounts Receivable      Dr	$10000
	Consulting Revenue		$10000
e	Unearned Consulting revenue   Dr	$5000
	Consulting Revenue		$5000
f	Salary Expense Dr	$500
	Salary Payable		$500

Osbourne's Animal Sanctuary
Adjusted Trial balance
December 31, 2019
Account Title	Debit	Credit
Cash	20000
Accounts Receivable	25000
Prepaid Insurance	2000
Supplies	3000
Equipment	80000
A/D Equipment		8000
Accounts Payable		10000
Salaries Payable		500
Unearned Consulting Revenue		2500
Osbourne's Capital		20000
Consulting Revenue		115000
Depreciation Expense- Equipment	8000
Supplies Expense	1500
Salaries Expense	11500
Insurance Expense	5000
Total	156000	156000