Journalizing adjusting entries and subsequent journal entriesLaughter Landscaping has collected the following data for the December 31 adjusting entries:Each Friday, Laughter pays employees for the current week’s Work. The amount of the weekly payroll is $8,000 for a five-day workweek. This year, December 31 falls on a Tuesday. Laughter will pay its employees on January 3.On January 1 of the current year, Laughter purchases an insurance policy that covers two years, $8,000.The beginning balance of Office Supplies was $4,300. During the year, Laughter purchased office supplies for $5,600, and at December 31 the office supplies on hand total $1,500.During December, Laughter designed a landscape plan and the client prepaid $6,500. Laughter recorded this amount as Unearned Revenue. The job will take several months to complete, and Laughter estimates that the company has earned 40% of the total revenue during the current year.At December 31, Laughter had earned $3,000 for landscape services completed for Turnkey Appliances. Turnkey has stated that it will pay Laughter on January 10.Depreciation for the current year includes Equipment, $3,000; and Trucks $2 200.Laughter has incurred $250 of interest expense on a $550 interest payment due on January 15.RequirementsJournalize the adjusting entry needed on December 31 for each of the previous items affecting Laughter Landscaping. Assume Laughter records adjusting entries only at the end of the year.Journalize the subsequent journal entries for adjusting entries

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Asked Dec 17, 2019
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Journalizing adjusting entries and subsequent journal entries

Laughter Landscaping has collected the following data for the December 31 adjusting entries:

  • Each Friday, Laughter pays employees for the current week’s Work. The amount of the weekly payroll is $8,000 for a five-day workweek. This year, December 31 falls on a Tuesday. Laughter will pay its employees on January 3.
  • On January 1 of the current year, Laughter purchases an insurance policy that covers two years, $8,000.
  • The beginning balance of Office Supplies was $4,300. During the year, Laughter purchased office supplies for $5,600, and at December 31 the office supplies on hand total $1,500.
  • During December, Laughter designed a landscape plan and the client prepaid $6,500. Laughter recorded this amount as Unearned Revenue. The job will take several months to complete, and Laughter estimates that the company has earned 40% of the total revenue during the current year.
  • At December 31, Laughter had earned $3,000 for landscape services completed for Turnkey Appliances. Turnkey has stated that it will pay Laughter on January 10.
  • Depreciation for the current year includes Equipment, $3,000; and Trucks $2 200.
  • Laughter has incurred $250 of interest expense on a $550 interest payment due on January 15.

Requirements

  1. Journalize the adjusting entry needed on December 31 for each of the previous items affecting Laughter Landscaping. Assume Laughter records adjusting entries only at the end of the year.
  2. Journalize the subsequent journal entries for adjusting entries 
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Expert Answer

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Record the adjusting entr...

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Account titles and Explanation Credit Debit Date Salaries expense (($8,000 / 5)* 2) $ 3,200 Dec 31 $ 3,200 Salaries payable (To record the salaries expense) Insurance expense (($8,000 / 24)*12) $4,000 Dec 31 $4,000 Prepaid insurance (To record the supplies expense) Office supplies expense ($4,300 +$5,600 -$1,500) Office supplies (To record the supplies expense) $8,400 Dec 31 $8,400 Unearned revenue ($6,500 *40%) $ 2,600 Dec 31 $2,600 Earned revenue (To record the revenue earned) Accounts receivable Service revenue (To record the service revenue earned) $ 3,000 Dec 31 $ 3,000 Depreciation expense Accumulated depreciation - Equipment Accumulated depreciation - Trucks |(To record depreciation expense) $5,200 Dec 31 $ 3,000 $2,200 Interest expense $ 250 Dec 31 $ 250 Interest payable (To record the interest expense)

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