Questions 410 of 14 The following information applies to the

Questions 4-10 (of 14) The following information applies to the questions displayed below) Mint Cleaning Inc. prepared the following unadjusted trial balance at the end of its second year of operations ending December 31 Account Titles Debit Credit $ 40 Accounts Recelvable Prepaid Insurance 84 Accumulated Depreciation Accounts Peyable Common Stock Retained Earnings Sales Revenue Insurance Expense Salarles and Wages Expense Supplies Expense 28 $183 $183 Other data not yet recorded at December 31: a Insurance expired during the year, $7 b. Depreciation expense for the year, $6. c. Wages payable, $ d. Income tax expense, S11. 4 0.28 points 1. Prepare the adjusting journal entries for the year ended December 31. (If no entry is required 2 3 4 6

Solution

Step 1 : Adjusting journal entries on 31st december are given as follows:-

Journal Entries (Amount in $)   

Step 2 : Adjusted trial balance after the above adjusting entries is shown as follows:-

Mint Cleaning Inc.

Adjusted Trial Balance

December 31 (Amount in $)

Step 3 : If the adjusting entries not recorded, then net income will be overstated as the expenses will be recorded lower than actual and hence result in overstating the net income. The total expense not recorded will be as follows:-

Total expense = Insurance expense+Depreciation expense+Salaries and wages expense+Income tax expense

= $7+$6+$9+$11 = $33

Hence the net income have been overstated by $33 if the adjusting journal entries not been recorded.

Step 4 : Income statement after the using the above adjusted balance is shown as follows:-

Mint Cleaning Inc.

Income Statement

For the year ended December 31 (Amount in $)

Transaction	General Journal	Debit	Credit
a)	Insurance expense	7
	Prepaid Insurance		7
	(To record the insurance expired during the year)
b)	Depreciation expense	6
	Accumulated depreciation		6
	(To record the depreciation expense)
c)	Salaries and wages expense	9
	Salaries and wages payable		9
	(To record the salaries and wages expense)
d)	Income tax expense	11
	Income tax payable		11
	(To record the income tax expense)