Answer:
See explanation section:
Explanation:
Date Account Name & Explanation Debit Credit
December 31 Salaries expense $1,420
Salaries payable $1,420
Note: Since salaries are unpaid, it is a liability. Hence, salaries payable are credit, however, salaries expenses are debit as it is an expense.
December 31 Insurance expense $1,700
Prepaid Insurance $1,700
Note: Since prepaid insurance are expired for the five months, therefore, prepaid insurance becomes credit. On the other hand, the expense are recorded as an expense because of the expiration of advance payment.
December 31 Depreciation expense $1,440
Accumulated Depreciation - Equipment $1,440
Note: Depreciation expense for a month = $120;
Depreciation expense for a year = $120 x 12 = $1,440
December 31 Supplies expense $72
Supplies $72
Note: Since supplies are used, supplies becomes an expense $(154-72) = $72.
