Depreciation on the company’s wind turbine equipment for the year is $5,000. The Prepaid Insurance account for the solar panels had a $2,000 debit balance at December 31 before adjusting for the costs of any expired coverage. Analysis of prepaid insurance shows that $600 of unexpired insurance coverage remains at year-end. The company received $3,000 cash in advance for sustainability consulting work. As of December 31, one-third of the sustainability consulting work had been performed. As of December 31, $1,200 in wages expense for the organic produce workers has been incurred but not yet paid. As of December 31, the company has earned, but not yet recorded, $400 of interest revenue from investments in socially responsible bonds. The interest revenue is expected to be received on
Depreciation on the company’s wind turbine equipment for the year is $5,000. The Prepaid Insurance account for the solar panels had a $2,000 debit balance at December 31 before adjusting for the costs of any expired coverage. Analysis of prepaid insurance shows that $600 of unexpired insurance coverage remains at year-end. The company received $3,000 cash in advance for sustainability consulting work. As of December 31, one-third of the sustainability consulting work had been performed. As of December 31, $1,200 in wages expense for the organic produce workers has been incurred but not yet paid. As of December 31, the company has earned, but not yet recorded, $400 of interest revenue from investments in socially responsible bonds. The interest revenue is expected to be received on
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Depreciation on the company’s wind turbine equipment for the year is $5,000.- The Prepaid Insurance account for the solar panels had a $2,000 debit balance at December 31 before adjusting for the costs of any expired coverage. Analysis of prepaid insurance shows that $600 of unexpired insurance coverage remains at year-end.
- The company received $3,000 cash in advance for sustainability consulting work. As of December 31, one-third of the sustainability consulting work had been performed.
- As of December 31, $1,200 in wages expense for the organic produce workers has been incurred but not yet paid.
- As of December 31, the company has earned, but not yet recorded, $400 of interest revenue from investments in socially responsible bonds. The interest revenue is expected to be received on January 12.
- For each of the above separate cases, prepare the required December 31 year-end
adjusting entries
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