Tutorial 10 – ADJUSTING ENTRY
The ledger accounts of Afaaq show the following balances as of December 31, 2019:
a.
Prepaid insurance
RM4,000
b.
Equipment
RM10,000
c.
Service income
RM1,500
d.
Unearned income
RM3,000
Additional information:
a.
The RM4,000 prepaid insurance represents the cost of an insurance policy covering two
years, effective from January 01, 2019.
b.
The depreciation rate on the equipment is 20%. The estimated residual value is zero.
c.
Services provided but not billed at December 31, 2019, are valued at RM500.
d.
Half of the unearned income has been earned during the year.
Requirement:
Prepare the adjusting entries for the year to December 31, 2019.
Date
31/12/2019
Account Title
Insurance Expense
Debit
2000
Prepaid Ins Expenses
expired for the year
31/12/2019
Depreciation Exp
31/12/2019
Accumulated Dep
(Yearly depreciation
charged)
Account Receivable
31/12/2019
Service Income
(Income accrued for
services realized)
Unearned Income
Service Income
Credit
2000
2,000
2,000
500
500
1,500
1,500
(Unearned income
realized)