Prepare general journal entries on December 31, 2018 to record the following unrelated year-end adjustments. (a) On December 2, 2018, $6,200 of supplies were purchased and recorded as an asset. A count revealed $1,000 still on hand at December 31, 2018. (b) Services performed during December but not yet billed to customers totaled $5,000. (c) Depreciation of equipment is recorded using the straight-line method over 10 years. The equipment was purchased on December 1, 2018 for $300,000, and has no residual value at the end of its useful life. (d) Prepaid insurance expired during the month of December was $2,500.

Prepare general journal entries on December 31, 2018 to record the following unrelated year-end adjustments. (a) On December 2, 2018, $6,200 of supplies were purchased and recorded as an asset. A count revealed $1,000 still on hand at December 31, 2018. (b) Services performed during December but not yet billed to customers totaled $5,000. (c) Depreciation of equipment is recorded using the straight-line method over 10 years. The equipment was purchased on December 1, 2018 for $300,000, and has no residual value at the end of its useful life. (d) Prepaid insurance expired during the month of December was $2,500.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 18P: Soon after December 31, 2019, the auditor requested a depreciation schedule for trucks of Jarrett...

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Soon after December 31, 2019, the auditor requested a depreciation schedule for trucks of Jarrett Trucking Company, showing the additions, retirements, depreciation, and other data affecting the income of the company in the 4-year period 2016 to 2019, inclusive. The following data were in the Trucks account as of January 1, 2016: The Accumulated DepreciationTrucks account, previously adjusted to January 1,2016, and duly entered in the ledger, had a balance on that date of 16,460. This amount represented the straight-line depreciation on the four trucks from the respective dates of purchase, based on a 5-year life and no residual value. No debits had been made to this account prior to January 1, 2016. Transactions between January 1,2017, and December 31, 2019, and their record in the ledger were as follows: 1. July 1, 2016: Truck no. 1 was sold for 1,000 cash. The entry was a debit to Cash and a credit to Trucks, 1,000. 2. January 1, 2017: Truck no. 3 was traded for a larger one (no. 5) with a 5-year life. The agreed purchase price was 12,000. Jarrett paid the other company 1,780 cash on the transaction. The entry was a debit to Trucks, 1,780, and a credit to Cash, 1,780. 3. July 1, 2018: Truck no. 4 was damaged in a wreck to such an extent that it was sold as junk for 50 cash. Jarrett received 950 from the insurance company. The entry made by the bookkeeper was a debit to Cash, 1,000, and credits to Miscellaneous Revenue, 50, and Trucks, 950, 4. July 1, 2018: A new truck (no. 6) was acquired for 20,000 cash and debited at that amount to the Trucks account. The truck has a 5-year life. Entries for depreciation had been made at the close of each year as follows: 2016, 8,840; 2017, 5,436; 2018, 4,896; 2019, 4,356. Required: 1. Next Level For each of the 4 years, calculate separately the increase or decrease in earnings arising from the companys errors in determining or entering depreciation or in recording transactions affecting trucks. 2. Prove your work by one compound journal entry as of December 31, 2019; the adjustment of the Trucks account is to reflect the correct balances, assuming that the books have not been closed for 2019.
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