Question

Adjusting Entries

1. Prepaid Insurance account began the year with a balance of $230. During the year,
insurance in the amount of $570 was purchased. At the end of the year (12/31), the
amount of insurance still unexpired was $350. Prepare the year end adjusting entry.

2. The Supplies account began the year with a balance of $190. During the year, supplies in
the amount of $490 were purchased. At the end of the year (12/31), the inventory of
supplies on hand was $220. Prepare the year end adjusting entry.

3. The depreciation expense on office equipment for the month of March is $50. This is the
third month that the office equipment, which cost $950, has been owned. Prepare the
adjusting entry for March and show the Balance Sheet presentation for Office Equipment
and related accounts after the adjustment.

4. Wages are paid every Saturday for a five day work week (Mon – Fri). Wages are $2,000
per week. Prepare the adjusting entry on June 30, assuming July 1 falls on a Wednesday.

5. On October 3, a deposit in the amount of $5,000 was received for services to be
performed. By the end of the month, services in the amount of $1,200 were performed.
Prepare journal entries for the original receipt of the deposit and the adjusting entry on
10/31.

6. On November 12, Smith Company received $8,000 in advance of services to be rendered
over the next two months ($4,000 per month – December and January). Prepare all the
associated journal entries in regards to this business transaction. (hint: three journal
entries)

7. On October 4, Smith Company rendered services valued at $11,000. The client will pay for
the services November 1.

8. At year end, property taxes for six months, estimated at $2,000, have accrued but have not
been recorded. Prepare the adjusting entry at year end (12/31).

9. At year end, unrecorded interest receivable from the US Government bonds is $1,700.
Prepare the adjusting entry at year end (12/31).

10. At year end, unrecorded interest expense due to creditors was $1,100 (payable in the next
year). Prepare the adjusting entry at year end (12/31).

Answer 1