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| Garvey Company’s unadjusted trial balance includes the following account balances as of December 31, 2015: |
| Debits | Credits | |||||
| Cash | $ | 70,530 | ||||
| Accounts receivable | 122,900 | |||||
| Interest receivable | 1,520 | |||||
| Supplies | 146,300 | |||||
| Prepaid insurance | 9,250 | |||||
| Notes Receivable (short-term) | 53,300 | |||||
| Equipment | 293,200 | |||||
| Accumulated Depreciation––Equipment | $ | 68,000 | ||||
| Accounts payable | 109,600 | |||||
| Salaries and Wages Payable | 22,700 | |||||
| Unearned revenue | 10,300 | |||||
| Notes Payable (long-term) | 91,800 | |||||
| Common Stock | 228,200 | |||||
| Retained earnings | 151,200 | |||||
| Service revenue | 42,700 | |||||
| Interest revenue | 23,000 | |||||
| Supplies Expense | 0 | |||||
| Repair and Maintenance Expense | 28,050 | |||||
| Rent Expense | 18,900 | |||||
| Depreciation Expense | 0 | |||||
| Insurance Expense | 0 | |||||
| Salaries and Wages Expense | 3,550 | |||||
| Totals | $ | 747,500 | $ | 747,500 | ||
| The following data are available to determine adjusting entries: |
| A) | Insurance purchased at the beginning of July for $9,250 provided coverage for twelve months (July 2015 through June 2016). The insurance coverage for July through December totaling $4,625 has now been used. |
| B) | The company estimates $8,700 in depreciation each year. |
| C) | Account showed $91,200 of supplies on hand at the end of the year. |
| D) | An additional $370 of interest has been earned but has not yet been uncollected on the outstanding notes receivable. |
| E) | Services in the amount of $6,150 were performed for customers who had previously paid in advance. |
| F) | Services in the amount of $3,100 were performed; these services have not yet been billed or recorded. |
| Required: | |
| a. | Prepare the adjusting entries that are required at the end of the period. (If no entry is required for a transaction/event, select “No Journal Entry Required” in the first account field.) |
Expert Answer
| a | Prepaid insurance | 4625 | ||
| Insurance expense | 4625 | |||
| b | Depreciation Expense | 8700 | ||
| Accumulated Depreciation––Equipment | 8700 | |||
| c | Supplies Expense | 55100 | =146300-91200 | |
| Supplies | 55100 | |||
| d | Interest receivable | 370 | ||
| Interest revenue | 370 | |||
| e | Unearned revenue | 6150 | ||
| Service revenue | 6150 | |||
| f | Accounts receivable | 3100 | ||
| Service revenue | 3100 |
