Question

Question: For each of the following separate cases, prepare adjusting entries required of financial statements for

the year ended (date of) December 31, 2017. (Entries can draw from the following partial chart of

accounts:

Cash; Interest Receivable; Supplies; Prepaid Insurance; Equipment; Accumulated

Depreciation—Equipment; Wages Payable; Interest Payable; Unearned Revenue; Interest Revenue;

Wages Expense; Supplies Expense; Insurance Expense; Interest Expense; Depreciation Expense—

Equipment.)

a. Wages of \(8,000 are earned by workers but not paid as of December 31, 2017.

b. depreciation on the company’s equipment for 2017 is \)18,000.

c. The Office Supplies account had a \(240 debit balance on December 31, 2016. During 2017, \)5,200 of

office supplies are purchased. A physical count of supplies at December 31, 2017, shows \(440 of supplies

available.

d. The Prepaid Insurance account had a \)4,000 balance on December 31, 2016. An analysis of insurance

policies shows that \(1,200 of unexpired insurance benefits remain at December 31, 2017.

e. The company has earned (but not recorded) \)1,050 of interest from investments in CDs for the year

ended December 31, 2017. The interest revenue will be received on January 10, 2018.

f. The company has a bank loan and has incurred (but not recorded) interest expense of $2,500 for the

year ended December 31, 2017. The company must pay the interest on January 2, 2018.

Short answer

Answer:

The interest expense account is debited and interest payable credited with $2,500

Step-by-step solution

Step-by-Step SolutionStep 1: Definition of interest payable

Interest payable is the amount due but not paid.

Adjusting entry for interest payable

	Journal entry
Date	Particulars	Debit	Credit
December 31, 2017	Interest Expense	$2,500
	Interest Payable		$2,500
	(Adjusting entry for the interest payable)