Prepare the required adjusting journal entry for each situation as of December 31,

Prepare the required adjusting journal entry for each situation as of December 31, 2010. See the
last page for the unadjusted account balances shown in T-accounts.
(a) Suppose Deana’s had received a $1,800 shipment of supplies in September 2010. When
counting the supplies on December 31, 2010, Deana’s found only $800 worth of supplies on
hand.
Debit and credit the accounts affected.
Dec. 31
2010

Ensure the equation still balances and debits = credits.
Assets
=
Liabiliti
+
es

Stockholders’ Equity

(b) Suppose Deana’s had paid $12,000 for six months’ rent on November 1, 2010. As of
December, 31, 2010, two months’ (November & December) prepaid rent has expired.
Debit and credit the accounts affected.
Dec. 31
2010

Ensure the equation still balances and debits = credits.
Assets
=
Liabiliti
+
es

Stockholders’ Equity

(c) Suppose Deana’s had paid $6,000 for one year’s insurance on June 1, 2010.
Debit and credit the accounts affected.

Dec. 31
2010

Ensure the equation still balances and debits = credits.
Assets
=
Liabiliti
+
es

Stockholders’ Equity

HANDOUT 4 – 1, continued
(d) The company had acquired Property, Plant & Equipment costing $40,000 on January 1, 2010.
Suppose that the depreciation on this Equipment was calculated to be $2,000 for 2010.
Debit and credit the accounts affected.

Ensure the equation still balances and debits = credits.
Assets
=
Liabiliti
+
es

Stockholders’ Equity

(e) On December 1, 2010, the company had sold $500 in gift certificates for decorating services
to a customer. On December 31, 2010, the accountant received an envelope containing $400
worth of redeemed gift certificates, not yet recorded in the company’s books.
Debit and credit the accounts affected.
Dec. 31
2010

Ensure the equation still balances and debits = credits.
Assets
=
Liabiliti
+
es

Stockholders’ Equity

(f) On June 30, 2010, the company invested $20,000 in a certificate of deposit that will yield
12% interest at the end of one year.
Debit and credit the accounts affected.
Dec. 31
2010

Ensure the equation still balances and debits = credits.
Assets
=
Liabiliti
+
es

Stockholders’ Equity

HANDOUT 4 – 1, continued
(g) The company borrowed a note payable from the bank for $30,000 on January 1, 2010, due
with all interest on June 30, 2011. The note payable requires 10% interest.
Debit and credit the accounts affected.
Dec. 31
2010

Ensure the equation still balances and debits = credits.
Assets
=
Liabiliti
+
es

Stockholders’ Equity

(h) The company calculated its income taxes as $26,110 for the year ended December 31, 2010.
Debit and credit the accounts affected.
Dec. 31
2010

Ensure the equation still balances and debits = credits.
Assets
=
Liabiliti
+
es

Stockholders’ Equity

(i) On December 15, 2010, the company declared a $750 dividend, payable January 15, 2011.
Debit and credit the accounts affected.
Dec. 31
2010

Ensure the equation still balances and debits = credits.

Assets

=

Liabiliti
es

+

Stockholders’ Equity

Post the adjusting entries above to the T-accounts on the following page.

HANDOUT 4 – 1, continued
Assets

Liabilities

Stockholders’ Equity

Unadj
.

Unadj
.

+ Cash –
43,45
0

– Accounts Payable +
250 Unadj
.

+ Supplies –
1,80
0

– Dividend Payable +
0 Unadj
.
(a)

+ Accounts Receivable –
Unadj 4,000
.

Unadj
.

+ Prepaid Rent –
12,00
0
(b)

+ Prepaid Insurance –
Unadj 6,000
.
(c)

+ Certificate of Deposit –
Unadj 20,00
.
0

– Unearned Revenue +
500 Unadj
.

– Notes Payable +
30,00 Unadj
0.

– Interest Payable +
0 Unadj
.

+ Contributed Capital –
10,00 Unadj.
0
– Retained Earnings +
0 Unadj
.
+ Dividends Declared –
Unadj
0
.

– Decorating Revenue +
120,000 Unadj
.

+ Investment Income –

+ Wage Expense –
Unadj 32,00
.
0
+ Utilities Expense –
Unadj 1,000
.

– Income Tax Payable +
0 Unadj
.

+ Telephone Expense –
Unadj
500
.
+ Supplies Expense –

+ Interest Receivable –
Unadj
0
.

+ Rent Expense –

+ Insurance Expense –

+ Property, Plant &
Equipment –
Unadj 40,00