Chapter 3, Problem 3.22E

(a)

To determine

Adjusting entries

Adjusting entries are those entries which are made at the end of the accounting period, to record the revenues in the period of which they have been earned and to record the expenses in the period of which have been incurred, as well as to update all the balances of assets and liabilities accounts on the balance sheet, and to ascertain accurate amount of net income (loss) on the income statement to maintain the records according to the accrual basis principle.

Accounting rules for journal entries:

• To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.
• To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

To prepare: The adjusting entries needed as at December 31.

(b)

To determine

To prepare: The adjusting entries needed as of December 31.

(c)

To determine

To prepare: The adjusting entries needed as of December 31 for supplies.

(d)

To determine

To prepare: The adjusting entries needed as of December 31 for depreciation on equipment.

(e)

To determine

To prepare: The adjusting entries needed as of December 31 for adjusting prepaid insurance.