Exercise 3-2: Preparing adjusting entries L.O. P1 Prepare adjusting journal entries for the year ended (date of) December 31, 2008, 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. (Omit the "$" sign in your response.) a. Depreciation on the company's equipment for 2008 is computed to be $15,000. General Journal Debit Credit Depreciation Expense-Equipment (4%) 15000 (4%) Accumulated Depreciation-Equipment (4%) 15000 (4%) ________________________________________ b. The Prepaid Insurance account had a $7,000 debit balance at December 31, 2008, before adjusting for the costs of any expired coverage. An analysis of the company's insurance policies showed that $910 of unexpired insurance coverage remains. General Journal Debit Credit Insurance Expense (4%) 6090 (4%) Prepaid Insurance (4%) 6090 (4%) ________________________________________ c. The Office Supplies account had a $260 debit balance on December 31, 2007; and $2,680 of office supplies was purchased during the year. The December 31, 2008, physical count showed $306 of supplies available. General Journal Debit Credit Cash (0%) 2634 (4%) Office Supplies (4%) 2634 (4%) ________________________________________ d. One-fourth of the work related to $11000 cash received in advance was performed this period. General Journal Debit Credit Cash (0%) 2750 (4%) Income received in advance (0%) 2750 (4%) ________________________________________ e. The Prepaid Insurance account had a $5,000 debit balance at December 31, 2008, before adjusting for the costs of any expired coverage. An analysis of insurance policies showed that $4,090 of coverage had expired. General Journal Debit Credit Insurance Expense (4%) 4090 (4%) Prepaid Insurance (4%) 4090 (4%) ________________________________________ f. Wage expenses of $1,000 have been incurred but are not paid as of December 31, 2008. General Journal Debit Credit Wages Payable (0%) 1000 (4%) Wages Expense (0%) 1000 (4%)

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