Question

Wages of $14,000 are earned by workers but not paid as of December 31, 2017.
Depreciation on the companyâs equipment for 2017 is $10,240.
The Office Supplies account had a $370 debit balance on December 31, 2016. During 2017, $5,544 of office supplies are purchased. A physical count of supplies at December 31, 2017, shows $604 of supplies available.
The Prepaid Insurance account had a $5,000 balance on December 31, 2016. An analysis of insurance policies shows that $2,500 of unexpired insurance benefits remain at December 31, 2017.
The company has earned (but not recorded) $1,000 of interest from investments in CDs for the year ended December 31, 2017. The interest revenue will be received on January 10, 2018.
The company has a bank loan and has incurred (but not recorded) interest expense of $4,500 for the year ended December 31, 2017. The company must pay the interest on January 2, 2018.
For each of the above separate cases, prepare adjusting entries required of financial statements for the year ended (date of) December 31, 2017.

Answer 1

The effects of transaction that are either not been documented at all or have been wrongly entered are implied by the modified diary entries.

How will the modified journal entries be?

1. As of the end of the year, employees owed $14,000 in unpaid wages.

Payroll due will indeed be credited with $14,000, which will then be deducted from the salary costs account.

2. The business's equipment has a $10,240 yearly depreciation.

Debiting the accumulated depreciation accounts of $10,240 will debit the depreciation expenses accounts.

3. A $370 debit balance was present in the Office Equipment accounts at the start the year. Office supplies are bought for a total of $5,544 every year. According to a physical inventory count, there were $604 worth of materials on hand as of December 31.

The cost of supplies will be computed by combining the beginning balance of materials and supplies bought throughout the year, then subtracting the ending balance, giving us the sum of $5310.

4. At the start of the year, there was $5,000 in the Prepaid Insurance accounts. There are still $2,500 in unused insurance coverage as of December 31 according to an examination of insurance contracts.

Out of the original $5,000 in pre-paid insurance, $2,500 has already been invested. ($5,000 - $2,500 = $2,500 )

By subtracting the sum of the opening and closing balance differences, that amounts is determined.

5. The business received $4,500 in interest revenue for the year that ended on December 31 but did not register it. On January 10, which is ten days following the completion of the calendar year, you'll get the interest charge.

This transaction will be entered as interest expense income by subtracting the interest receivable accounts and credit the interest accounts receivable even by sum of $1,000.

6. For the fiscal year that concluded on December 31, the business incurred $4,500 in interest costs that were not recorded. The business will pay interest on January 2, five days after the conclusion of the year.

This represents an item for unpaid interest, and $.4,500 will be deducted from the interest expenditure account and deposited to the interest charged account as a result.

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