David’s Services provides general home maintenance to customers. The company’s fiscal year-end is December 31. The December 31, 2015, trial balance (before any adjusting entries) appears below.

Information necessary to prepare the year-end adjusting entries appears below.
a. Depreciation on the equipment for the year is $13,600.
b. Employee salaries are paid every two weeks. The last pay period ended on December 23. Salaries earned from December 24 through December 31, 2015, are $4,200.
c. On August 1, 2015, David’s borrows $40,000 from a local bank and signs a note. The note requires interest to be paid annually on August 31 at 12%. The principal is due in four years.
d. On April 1, 2015, the company purchases insurance for $15,000 for a one-year policy to cover possible injury to workers. The entire $15,000 was debited to Prepaid Insurance at the time of the purchase.
e. $3,000 of supplies remains on hand at December 31, 2015.
f. On December 30, Mike’s receives a utility bill of $1,900 for the month. The bill will not be paid until early January, 2016, and no entry was recorded when the bill was received.

Required: Prepare the necessary adjusting entries on December 31,2015.

  • CreatedJuly 15, 2014
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