E4-1 (Algo) Explaining Why Adjustments Are Needed and Preparing Adjustments [LO 4-1, LO 4-2]

A list of various reasons for adjusting account balances is presented below, along with an unadjusted trial balance presented for the year ended December 31.

1. As of December 31, the equipment has been used for two full years. Approximately $1,344 of the equipments usefulness is consumed each year.
2. On December 31, the company performed $520 of services for a customer but has not yet recorded or billed the customer.
3. On December 31, the company received an e-mail from its utility company indicating the company used $370 of services during December. The company has not recorded this item because the $370 will not be paid until January 15.
4. Salaries and wages totaling $453 for the second half of December have not yet been paid or recorded.
5. No adjustment is needed for this account.

Account Name	Debit	Credit
1. Cash	$ 6,120
2. Accounts Receivable	620
3. Equipment	12,360
4. Accumulated Depreciation		$ 2,576
5. Accounts Payable		820
6. Salaries and Wages Payable		0
7. Common Stock		10,000
8. Retained Earnings		5,377
9. Service Revenue		12,324
10. Salaries and Wages Expense	7,895
11. Depreciation Expense	1,232
12. Utilities Expense	2,870
Totals	$31,097	$31,097

Required:

1. For each account balance numbered 1-12, choose an appropriate reason from a-dthat explains why that particular account balance needs to be adjusted or choose e. when no adjustment is needed.

2. Prepare the adjusting journal entries required as of December 31.