HANDOUT 4 - HANDOUT 4 1 ADJUSTING ENTRIES AND POSTING TO...

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HANDOUT 4 – 1 ADJUSTING ENTRIES AND POSTING TO T-ACCOUNTS Prepare the required adjusting journal entry for each situation as of December 31, 2008. See the last page for the unadjusted account balances shown in T-accounts. (a) Suppose Deana’s had received a $1,800 shipment of supplies in September 2008. When counting the supplies on December 31, 2008, Deana’s found only $800 worth of supplies on hand. Debit and credit the accounts affected. Dec. 31 Supplies Expense 1000 2008 Supplies 1000 Ensure the equation still balances and debits = credits. Assets = Liabilities + Stockholders’ Equity Supplies (- A) -1000 No Effect No Effect Supplies Expense (-E) -1000 (b) Suppose Deana’s had paid $12,000 for six months’ rent on November 1, 2008. As of December, 31, 2008, two months’ (November & December) prepaid rent has expired. Debit and credit the accounts affected. Dec. 31 Rent Expense 4000 2008 Prepaid Rent 4000 Ensure the equation still balances and debits = credits. Assets = Liabilities + Stockholders’ Equity PP Rent -4000 No effect No effect Rent Expense -4000 (c) Suppose Deana’s had paid $6,000 for one year’s insurance on June 1, 2008. Debit and credit the accounts affected. Dec. 31 Insurance Expense 3500 2008 Prepaid Insurance 3500 Ensure the equation still balances and debits = credits. Assets = Liabilities + Stockholders’ Equity PP Insurance -3500 No effect No Effect Insurance Expense -3500
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HANDOUT 4 – 1, CONTINUED (d) The company had acquired Property, Plant & Equipment costing $40,000 on January 1, 2008. Suppose that the depreciation on this Equipment was calculated to be $2,000 for 2008. Debit and credit the accounts affected.
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HANDOUT 4 - HANDOUT 4 1 ADJUSTING ENTRIES AND POSTING TO...

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