Kirk Enterprises offers rug cleaning services to business clients. Below is the

Question

Kirk Enterprises offers rug cleaning services to business clients. Below is the adjustments data for the year ended July 31.

Required:

Using this information along with the spreadsheet below, record the adjusting entries in proper general journal form.

Adjustments:

a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly over its useful life. Record one month’s depreciation.

b) Accrued wages, $2.

c) Unused supplies on hand, $8.

d) Of the unearned revenue, 75% has been earned.

e) Unexpired insurance remaining at the end of the month, $9.

Kirk Enterprises End-of-Period Spreadsheet For the Year Ended July 31 Trial Balance Adjustments Adjusted Trial Balance Debit Credit Debit Credit Debit Credit Cash 36 Prepaid Insurance 12 Fees Receivable 56 Supplies 12 Equipment 60 Accumulated Depreciation 12 Unearned Revenue 20 Accounts Payable 32 Wages Payable Common Stock 84 Dividends 4 Service Revenue 80 Advertising Expense 28 Wage Expense 20 Insurance Expense Supplies Expense Depreciation Expense Totals 228 228

Explanation / Answer

a) Depreciation Expense A/c $1 TO Accumulated depreciaion A/c $1 (Being Depreciaiton recorded for a month (60/5 = 12x1/12 = $1) b) Wages Expense A/c $2 To Accrued Wages or Wages payable $2 c) Supplies Expense A/c $4 To supplies A/c $4 (Being Supplies used recorded) d) Unearned Revenue A/c $5 To service Revenue $5 (Being unearned revenue recorded e) Insurance Expense Dr $9 To Prepaid Insurance $9

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