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Ellen_D_s+Journal+entries - useful life 3 yr 12 mo g dr...

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Journal entries for Ellen & Daughters, Inc. Debit Credit a) dr: Wages Expense 11,000 cr: Wages payable 11,000 Accrue tells you cash will be paid later for expenses. b) dr: Unearned revenues 41,000 cr: Service revenues 41,000 The expression performed services tells us you have revenues, the second part tells us you received the cash in advance. As a result you are fulfilling your obligation (debt) by providing the service. c) No journal entry is necessary for a contract. You may have a legal obligation but not an accounting one yet. d) dr: Accounts Receivable 4,000 cr: Service Revenues 4,000 e) dr: Depreciation Expense 4500 cr: Accumulated depreciation 4500 You should have memorized this journal entry. We do not decrease the asset but use the contra-asset account. f) dr: Insurance Expense 9000 cr: Prepaid Insurance 9,000 Cost x time $108,000 x 3 mo
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Unformatted text preview: useful life 3 yr * 12 mo g) dr: Supplies Expense 37,500 cr: Supplies 37,500 You started with $45,000 of supplies and ended with $7,500 so you must have used $37,500. Use of an asset creates an expense. h) dr: Interest Receivable 4000 cr: Interest Revenue 4000 As time passes you earn interest revenue when you lend money. Accrue tells you cash will be collected later. You know you lent money because you have a note receivable. Note: In Acct 207, it would be extremely rare if you debit a revenue, credit an expense, credit a dividend or debit any stockholder equity accounts. Please review the generalization handout and the chart of accounts. Net income = $500 Current assets = $211,500 Long-term assets = $90,500 Current liabilities = $170,000 Stockholders' Equity = $132,000...
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