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adjusted depreciation entries in journals

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Prepare adjusting journal entries for the year ended (or date of) December 31, 2005, for each of these separate situations.

Assume that prepaid expenses are initially recorded in asset accounts. Also assume that fees collected in advance of work are initially recorded as liabilities.

a. Depreciation on the company's equipment for 2005 is computed to be $16,000.
b. The Prepaid Insurance account had a $7,000 debit balance at December 31, 2005, before adjusting for the costs of any expired coverage. An analysis of the company's insurance policies showed that $1,040 of unexpired insurance coverage remains.
c. The Office Supplies account had a $300 debit balance on December 31, 2004; and $2,680 of office supplies was purchased during the year. The December 31, 2005, physical count showed $354 of supplies available.
d. One-half of the work related to $10,000 cash received in advance was performed this period.
e. The Prepaid Insurance account had a $5,600 debit balance at December 31, 2005, before adjusting for the costs of any expired coverage. An analysis of insurance policies showed that $4,600 of coverage had expired.
f. Wage expenses of $4,000 have been incurred but are not paid as of December 31, 2005.

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Solution Preview

a. Depreciation expense 16000
Accumulated depreciation 16000

b. Insurance expense 5960
Prepaid ...

Solution Summary

The solution shows the exact adjusting journal entries needed for each of the items presented.

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In January of 2005 Keona Co pays 2800000 for a tract of land with two buildings on it. it plans to demolish building one and build a new store. Building two will be a company office it is appraised at 641300 with a usefull life of 20 years and an 80000 salvage value. Without the buildings and improvements the tract of land is valued at 1865600 Keona also has the followin costs
demolish building 1 422600
grading cost 167200
cost of new buil
construction 219000
cost of new land
improvements 158000

1. prepare a table with the following column headings Land, Building 2, Building 3, Land improv 1, Land Improvments 2. Allocate the costs incurred by Keona to the appropriate columns and total each column ( round percents to the nearest 1%)

2. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on Jan 1 2005

3. Using the straight line method prepare dec 31 adjusting entries to record depreciation for the 12 months of 2005 when these assets where in use

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