i have to complete my general journal

Question

In 2020 your friend Kent started a moving company, Kent’s Moving Co. He hired a bookkeeper to journalize all the business transactions that occurred for the year, and she posted those entries to the General Ledger as well. The bookkeeper has recently quit, and Kent has no knowledge of accounting and asked you to help him with the adjustment process for December 31, 2020. He has provided you with the balances for each account in his General Ledger. 

Adjustments needed:

Insurance was paid $2400 for the year, adjust the monthly cost for December.

Moving supplies started with $1600 at the beginning of the month of December and ended with $1100 as the ending balance on 12/31/20.

December’s depreciation expense for the moving truck was $450.

Wages earned but not paid until the first paycheck in 2021, $275.

Answer 1

Hi Jenny,

For insurance, we look at both the cost and duration. Since the insurance was $2400 for a full year, which is 12 months, we can divide $2400 by 12 and get $200 a month.

Since insurance is being used, this is an expense, and when an expense goes up, it is a debit. Since we prepaid for the insurance, this is an asset that we are using, and when an asset is used, it is a credit.

Thus, the entry for this would be:

Dr. Insurance Expense $200

Cr. Pre-Paid Insurance $200

I'm happy to work the rest of these with you in a short session, feel free to reach out!

Best,

Patrick