Answer:
Penny's Pool Service & Supply, Inc.
Adjusting Entries:
a. Debit Wages Expense $7,500
Credit Wages Payable $7,500
To record accrued wages.
b. Debit Deferred Revenue $4,000
Credit Service Revenue $4,000
To record earned revenue.
c. Debit Utility Expense $520
Credit Utility Payable $520
To record accrued utility expense.
d. Debit Interest Expense $2,000
Credit Interest Payable $2,000
To record interest expense due.
e. Debit Accounts Receivable $800
Credit Service Revenue $800
To record service revenue earned.
f. Debit Insurance Expense $875
Credit Prepaid Insurance $875
To record expired insurance for the period.
g. Debit Supplies Expense $23,700
Credit Supplies $23,700
To record supplies expense for the period.
h. Debit Depreciation Expense - building and equipment $8,300
Credit Accumulated Depreciation - building and equipment $8,300
To record depreciation expense for the period.
i. Debit Interest Receivable $110
Credit Interest Revenue $110
To record interest revenue earned.
Explanation:
a) Data and Analysis:
a. Wages Expense $7,500 Wages Payable $7,500
b. Deferred Revenue $4,000 Service Revenue $4,000 ($24,000 * 2/12)
c. Utility Expense $520 Utility Payable $520
d. Interest Expense $2,000 Interest Payable $2,000 ($30,000 * 10% * 8/12)
e. Accounts Receivable $800 Service Revenue $800
f. Insurance Expense $875 Prepaid Insurance $875 ($4,200 * 5/24)
g. Supplies Expense $23,700 Supplies $23,700 ($3,100+23,000- 2,400)
h. Depreciation Expense - building and equipment $8,300 Accumulated Depreciation - building and equipment $8,300
i. Interest Receivable $110 Interest Revenue $110
In accounting terms, the adjusting entries are the entries that are usually made at the end of the accounting or the financial year in order to allocate the income and expenditure to the period of time in which they are actually incurred.
The Journal entries have been attached below.
Working notes:
[tex]\begin{aligned}\text{Service Revenue}= \$4,000\times \$24,000 \times\frac{2}{12}\end{aligned}[/tex]
[tex]\begin{aligned}\text{ Interest Payable}= \$2,000\times\$30,000 \times 10\% \times\frac{8}{12}\end{aligned}[/tex]
[tex]\begin{a;igned}\text{Prepaid Insurance}=\ $875 \times\$4,200 \times\frac{5}{24}\end{aligned}[/tex]
[tex]\text{Supplies}=\ $23,700 \times(\$3,100+23,000- 2,400)[/tex]
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