Exercise 3-7 Preparing adjusting entries LO P1, P3, P4Wages of $13,000 are earned by workers but not paid as of December 31.Depreciation on the company’s equipment for the year is $10,120.The Office Supplies account had a $400 debit balance at the beginning of December. During December, $5,126 of office supplies are purchased. A physical count of supplies at December 31 shows $563 of supplies available.The Prepaid Insurance account had a $5,000 balance at the beginning of December. An analysis of insurance policies shows that $2,600 of unexpired insurance benefits remain at December 31.The company has earned (but not recorded) $550 of interest revenue for the year ended December 31. The interest payment will be received on 10 days after the year-end January 10.The company has a bank loan and has incurred (but not recorded) interest expense of $4,000 for the year ended December 31. The company will pay the interest five days after the year-end on January 5.For each of the above separate cases, prepare adjusting entries required of financial statements for the year ended (date of) December 31.

Introduction:- Journal entry is the first stage of accounting process. Journal entry used to record…

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Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter3: Accrual Accounting

Section: Chapter Questions

Problem 31BE: Brief Exercise 3-31 Adjusting Entries-Accruals Nichols Company had the following items that required...

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Exercise 3-7 Preparing adjusting entries LO P1, P3, P4

Wages of $13,000 are earned by workers but not paid as of December 31.
Depreciation on the company’s equipment for the year is $10,120.
The Office Supplies account had a $400 debit balance at the beginning of December. During December, $5,126 of office supplies are purchased. A physical count of supplies at December 31 shows $563 of supplies available.
The Prepaid Insurance account had a $5,000 balance at the beginning of December. An analysis of insurance policies shows that $2,600 of unexpired insurance benefits remain at December 31.
The company has earned (but not recorded) $550 of interest revenue for the year ended December 31. The interest payment will be received on 10 days after the year-end January 10.
The company has a bank loan and has incurred (but not recorded) interest expense of $4,000 for the year ended December 31. The company will pay the interest five days after the year-end on January 5.

For each of the above separate cases, prepare adjusting entries required of financial statements for the year ended (date of) December 31.

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