Supplemental Instruction Handouts
Financial Accounting
Chapter 3:
Adjusting Accounts for Financial Statements
Answer Key
Prepare the adjusting general journal entries for the end of the month.
October 31st recorded depreciation on the computer equipment of $125.
Date
Oct 31
General Journal
Account Titles and Explanations
Depreciation Expense – Computer Equipment
Accumulated Depreciation – Computer Equipment
PR
Debit
125
Page ____
Credit
125
October 31st we have used $75 of insurance for the month.
Date
Oct 31
General Journal
Account Titles and Explanations
Insurance Expense
Prepaid Insurance
PR
Page ____
Credit
Debit
75
75
October 31st $375 of the unearned accounting fees have now been earned.
Date
Oct 31
General Journal
Account Titles and Explanations
Unearned Accounting Fees
Accounting Fees Earned
PR
Page ____
Credit
Debit
375
375
October 31st we received our utility bill for $87.50 for the month of October. This
amount will be paid in November.
Date
Oct 31
General Journal
Account Titles and Explanations
Utility Expense
Accounts Payable
PR
Debit
87.50
Page ____
Credit
Academic Success Centre
www.rrc.mb.ca/asc
These answers were created by Michael Reimer for the Academic Success Centre.
87.50
October 31st we had done $225 of accounting work for a client. We have completed
half of the project for this client and when the other half is completed in November we
will receive payment from the customer.
Date
Oct 31
General Journal
Account Titles and Explanations
Accounts Receivable
Accounting Fees Earned
PR
Page ____
Credit
Debit
225
225
October 31st we discovered that $50 in the accounting fees earned account is for work
that will be completed in November.
Date
Oct 31
General Journal
Account Titles and Explanations
Accounting Fees Earned
Unearned Accounting Fees
PR
Page ____
Credit
Debit
50
50
October 31st we recorded $75 worth of depreciation on the computer software library.
Date
Oct 31
General Journal
Account Titles and Explanations
Depreciation Expense – Computer Software Library
Accumulated Depreciation – Computer Software
Library
PR
Page ____
Credit
Debit
75
75
October 31st when we started the month, we had $132 worth of office supplies on hand.
We purchased $227 worth of supplies throughout the month. A physical count at the
end of the month showed that $165 worth of supplies remained.
Supplies Used = Beginning Inventory + Purchases – Ending Inventory
$132 + $227 - $165 = $194
Date
Oct 31
General Journal
Account Titles and Explanations
Office Supplies Expense
Office Supplies
PR
Page ____
Credit
Debit
194
Academic Success Centre
www.rrc.mb.ca/asc
These answers were created by Michael Reimer for the Academic Success Centre.
194
October 31st we had used up one month of rent in October. At the beginning of the
month we had prepaid rent for the next three months for $1,800.
Rent Used = $1,800 ÷ 3 months = $600/month x 1 month = $600
Date
Oct 31
General Journal
Account Titles and Explanations
Rent Expense
Prepaid Rent
PR
Page ____
Credit
Debit
600
600
October 31st we have a loan of $120,000 that requires monthly payments of interest at a
rate of 7% on the 5th day of the following month.
I = Prt
P = $120,000
r = 7% = 0.07
1
t = 1 month = 12
1
I = $120,000 x 0.07 x 12 = $700
Date
Oct 31
General Journal
Account Titles and Explanations
Interest Expense
Interest Payable
PR
Page ____
Credit
Debit
700
Academic Success Centre
www.rrc.mb.ca/asc
These answers were created by Michael Reimer for the Academic Success Centre.
700