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Assume the following adjustment data.

a. Supplies on hand at October 31 total $520.
b. Expired insurance for the month is $120.
c. Depreciation for the month is $135.
d. As of October 31, services worth $950 related to the previously recorded unearned revenue had been performed.
e. Services performed but unbilled (and no receivable has been recorded) at October 31 are $250.
f. Interest expense accrued at October 31 is $75.
g. Accrued salaries at October 31 are $1,520.

Required:
Prepare the adjusting entries for the items above.

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Zviko

Answer:

a.

Debit : Balance Sheet $520

Credit : Supplies $520

b.

Debit : Insurance expense $120

Credit : Prepaid Insurance $120

c.

Debit : Depreciation expense $135

Credit : Accumulated depreciation expense $135

d.

Debit : Unearned Revenue $950

Credit : Revenue Earned $950

e.

Debit : Trade Receivable $250

Credit : Service Revenue $250

f.

Debit : Interest expense $75

Credit : Note Payable $75

g.

Debit : Salaries expense $1,520

Credit : Accounts Payables $1,520

Explanation:

So adjusting entries are done at the end of the reporting period, in this case it is the end of October.

For most of these entries we recognize expenses and a corresponding decrease in assets or increase in liabilities.

As for revenue previously unearned, we have to recognize the revenue portion now earned.

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