For each of the following separate situations, prepare the necessary adjustments (a) using the financial statement effects template and (b) in journal entry form. 1. Unrecorded depreciation on equipment is $610. 2. On the date for preparing financial statements, an estimated utilities expense of $390 has been incurred, but no utility bill has yet been received or paid. 3. On the first day of the current period, rent for four periods was paid and recorded as a $2,800 debit to Prepaid Rent and a $2,800 credit to Cash. 4. Nine months ago, The Hartford Financial Services Group sold a one-year policy to a customer and recorded the receipt of the premium by debiting Cash for $624 and crediting Contract Liabilities for $624. No adjusting entries have been prepared during the nine-month period. Hartford's annual financial statements are now being prepared. 5. At the end of the period, employee wages of $965 have been incurred but not yet paid or recorded. 6. At the end of the period, $300 of interest income has been earned but not yet received or recorded. (a) using the financial statement effects template (b) in journal entry form

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01-02-2021
Business

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For each of the following separate situations, prepare the necessary adjustments (a) using the financial statement effects template and (b) in journal entry form. 1. Unrecorded depreciation on equipment is $610. 2. On the date for preparing financial statements, an estimated utilities expense of $390 has been incurred, but no utility bill has yet been received or paid. 3. On the first day of the current period, rent for four periods was paid and recorded as a $2,800 debit to Prepaid Rent and a $2,800 credit to Cash. 4. Nine months ago, The Hartford Financial Services Group sold a one-year policy to a customer and recorded the receipt of the premium by debiting Cash for $624 and crediting Contract Liabilities for $624. No adjusting entries have been prepared during the nine-month period. Hartford's annual financial statements are now being prepared. 5. At the end of the period, employee wages of $965 have been incurred but not yet paid or recorded. 6. At the end of the period, $300 of interest income has been earned but not yet received or recorded. (a) using the financial statement effects template (b) in journal entry form

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Answer:

Adjustments (a) using the financial statement effects template and (b) in journal entry form

1. Unrecorded depreciation on equipment is $610.

a) Assets (Equipment -$610) = Liabilities + Equity (Retained Earnings -$610)

b) Debit Depreciation Expense $610

Credit Accumulated Depreciation $610

2. On the date for preparing financial statements, an estimated utilities expense of $390 has been incurred, but no utility bill has yet been received or paid.

a) Assets = Liabilities (Utilities payable +$390) + Equity (Retained Earnings +$390)

b) Debit Utilities Expense $390

Credit Utilities payable $390

3. On the first day of the current period, rent for four periods was paid and recorded as a $2,800 debit to Prepaid Rent and a $2,800 credit to Cash.

a) Asset (Prepaid Rent -$700) = Liabilities + Equity (Retained Earnings -$700)

b) Debit Rent Expense $700

Credit Prepaid Rent $700

4. Nine months ago, The Hartford Financial Services Group sold a one-year policy to a customer and recorded the receipt of the premium by debiting Cash for $624 and crediting Contract Liabilities for $624. No adjusting entries have been prepared during the nine-month period. Hartford's annual financial statements are now being prepared.

a) Assets = Liabilities (Contract Liabilities -$468) + Equity (Retained Earnings +$468)

b) Debit Contract liabilities $468

Credit Premium Revenue Earned $468

5. At the end of the period, employee wages of $965 have been incurred but not yet paid or recorded.

a) Assets = Liabilities (Wages Payable +$965) + Equity (Retained Earnings -$965)

b) Debit Wages Expense $965

Credit Wages Payable $965

6. At the end of the period, $300 of interest income has been earned but not yet received or recorded.

a) Assets (Interest Receivable +$300) = Liabilities + Equity (Retained Earnings + $300)

b) Debit Interest Receivable $300

Credit Interest Revenue $300

Explanation:

Each of the above adjustments has effects on the balance sheet and the income statement (through the retained earnings balance). The effects on the assets, liabilities, and equity represent the balance sheet effects. The effects on the retained earnings represent the income statement effects. Since the retained earnings are determined in the income statement and transferred to the balance sheet, we can actually use the accounting equation to depict all the effects as above.

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