Trial Balance of FRS Company’s accounts as of January 31 2020 given as follows: Trial Balance Account Title Debit Credit Cash 372850 Accounts Receivable 48500 Supplies 26000 Prepaid Insurance 10800 Inventory 16425 Equipment 46000 Accumulated Depreciation-Equipment 20000 Accounts Payable 96000 Salary Payable 0 Unearned Sales Revenue 25000 Capital 341800 Withdrawals 0 Sales Revenue 96000 Sales Returns& Allowances 7500 Sales Discounts 1650 Cost of Goods Sold 49075 Insurance Expense Depreciation Expense-Equipment Supplies Expense Salary Expense Total 578800 578800 On January 31, 2018 FRS Company completed following adjusting entries: Expiration of prepaid insurance for one month is 1800$ Depreciation of equipment for the month, $8,500 Supplies used, $12,000 Unearned sales revenue still unearned, $12,000. Accrued salary of the January 2017 is $16,000 which will be paid on the 5th of February. Requirements:Journalize adjusting entries and prepare adjusted trial balance.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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|
Trial Balance |
||
|
Account Title |
Debit |
Credit |
|
Cash |
372850 |
|
|
Accounts Receivable |
48500 |
|
|
Supplies |
26000 |
|
|
Prepaid Insurance |
10800 |
|
|
Inventory |
16425 |
|
|
Equipment |
46000 |
|
|
Accumulated Depreciation-Equipment |
|
20000 |
|
Accounts Payable |
|
96000 |
|
Salary Payable |
|
0 |
|
Unearned Sales Revenue |
|
25000 |
|
Capital |
|
341800 |
|
Withdrawals |
0 |
|
|
Sales Revenue |
|
96000 |
|
Sales Returns& Allowances |
7500 |
|
|
Sales Discounts |
1650 |
|
|
Cost of Goods Sold |
49075 |
|
|
Insurance Expense |
|
|
|
Depreciation Expense-Equipment |
|
|
|
Supplies Expense |
|
|
|
Salary Expense |
|
|
|
Total |
578800 |
578800 |
On January 31, 2018 FRS Company completed following
- Expiration of prepaid insurance for one month is 1800$
- Depreciation of equipment for the month, $8,500
- Supplies used, $12,000
- Unearned sales revenue still unearned, $12,000.
- Accrued salary of the January 2017 is $16,000 which will be paid on the 5th of February.
Requirements:Journalize adjusting entries and prepare adjusted trial balance.
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