P3-33A Journalizing adjusting entries and subsequent journal entries Laughter La
ID: 2401013 • Letter: P
Question
P3-33A Journalizing adjusting entries and subsequent journal entries Laughter Landscaping has collected the following data for the December 31 adjusting entries: Each Friday, Laughter pays employees for the current week's work. The amount of the weekly payroll is $8,000 for a five-day workweek. This year, December 31 falls on a Tuesday. Laughter will pay its employees on January 3 b. On January 1 of the current year, Laughter purchases an insurance policy that covers two years, $8,000. c. The beginning balance of Office Supplies was $4,300. During the year, Laughter purchased office supplies for $5,600, and at December 31 the office supplies on hand total $1,500. d. During December, Laughter designed a landscape plan and the client prepaid S6,500. Laughter recorded this amount as Unearned Revenue. The job will take several months to complete, and Laughter estimates that the company has earned 40% of the total revenue during the current year e. At December 31, Laughter had earned $3,000 for landscape services completed for Turnkey Appliances. Turnkey has stated that it will pay Laughter on January 1(0 f. Depreciation for the current year includes Equipment, $3,000; and Trucks, $2,200. g. Laughter has incurred $250 of interest expense on a S550 interest payment due on January 15 Requirements 1. Journalize the adjusting entry needed on December 31 for each of the previous items affecting Laughter Landscaping. Assume Laughter records adjusting entries only at the end of the year. Journalize the subsequent journal entries for adjusting entries a, d, and g.Explanation / Answer
Adjusting entries TR Accounting titles & Explanations Debit Credit a) Salary expense 3200 salary payable 3,200 (8000/5)*2 b) insurance expense 4000 prepaid insurance 4,000 (8000/24)*12 c) office supplies expense 8400 office supplies 8,400 (4300+5600-1500) d) unearned revenue 2600 revenue earned 2,600 (6500*40%) e) Accounts receivable 3,000 service revenue 3,000 f) Depreciation expense 5,200 Accumulated depreciation -Equipment 3,000 Accumulated depreciation -Trucks 2,200 g) interest expense 250 interest payable 250 2) Subsequent entries Date Accounting titles & Explanations Debit Credit 3-Jan Salary expense 4800 Salary payable 3,200 cash 8,000 d. unearned revenue 3900 Service revenue 3,900 (6500*60%) 15-Jan interest expense 300 interest payable 250 cash 550
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