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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

JOURNALIZING ADJUSTING ENTRIES From the Adjustments columns in Exercise 5-9B, journalize the four adjusting entries as of June 30, in proper general journal format.

To determine

Prepare journal entry to record the given adjustments as of June 30.

Explanation

Adjusting entries:

Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and stockholders’ equity) to maintain the records according to accrual basis principle.

(a) Prepare the adjusting entry for the supplies costing $430.

DateAccount Titles and explanationPost. Ref.Debit ($)Credit ($)
June 30Supplies expense  430 
      Supplies   430
 (To record the supplies inventory at the end of the month June)   

Table (1)

  • Supplies expense (Expense) is a component of stockholder’s equity and there is an increase in the value of expense. Hence, debit the supplies expense by $430.
  • Supplies are an asset and there is decrease in the value of an asset. Hence, credit the supplies by $430.

(b) Prepare the adjusting entry for the insurance premium expired at $550.

DateAccount Titles and explanationPost. Ref.Debit ($)Credit ($)
June 30Insurance expense 550 
      Prepaid insurance   550
 (To record the insurance expense during the end of the month June.)   

Table (2)

  • Insurance expense (Expense) is a component of stockholder’s equity and there is an increase in the value of expense. Hence, debit the insurance expense by $550.
  • Prepaid insurance is an asset and there is decrease in the value of an asset...

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